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How to write a simple business plan for students.

Business Plan

A business plan always has the same structure. Of course, if you plan to sell coffee, not to produce it, you will skip the “production” part, but other than that – you can’t skip anything.

Writing a business plan as a student , as a part of your college or university project, the best thing you can do is just to go into too many details. You have to save the structure, but you can describe your competitors in one abstract, not in five pages, with numbers and poll data.

Basic Business Plan Structure

Mostly, students are asked to make a marketing analysis and marketing plan more professionally than other parts, so we give more details about them.

Description of your business

Here is a brief overview of the experience of the entrepreneur, the date of creation of the company, the field of business, goals, and objectives of the work, available base, and resources.

Market analysis

List of competitors and their offers, estimation of demand, options of promotion and sale.

  • Evaluation of the market. It is necessary to estimate the capacity of the market, the population, the number of potential customers. It is difficult to do this without complete marketing research. Therefore, you should look for the results of this assessment for your region. As a last resort, you can predict the estimated demand.
  • Competitors. Make a list of your competitors who are already working in this market. Not only direct competitors that offer similar products and services but also those companies that produce alternative services should be considered. If you do not have a specialized tea boutique in your city, this does not mean that the market is free from competitors: you have to fight for customers with those department stores and supermarkets that also sell different types of tea.

Production plan

List of products (services provided) and their volumes, technological processes, necessary equipment and materials, cost calculation.

  • Business processes. Write down the list of equipment, tools, raw materials, and materials needed to create your chosen range of products and services. Calculate the optimum production volumes your equipment can handle. Specify which employees and what kind of downloads you will need.
  • Products. List the products, services, and work that you will offer your customers. Costs for the organization of business processes will allow you to find out the cost and to make a price list.
  • Start-up investment. Calculate how much money it will take to start a project. Sum up the cost of all assets, fixed assets, repairs, materials, and other expenses that will be required to start production.

Organizational plan

List of necessary staff, organization of work, distribution of functions and tasks in the team, involvement of third-party organizations and specialists, personnel costs — calendar of activities for launching the project.

Marketing plan

Advertising channels and costs, ways to promote a company and its products (services), estimated marketing impact – sales volume, number of customers, and transactions.

  • Promotion channels. Newspaper ads, radio and TV commercials, online advertising, creating your own site and group on social networks, advertising in local publics and forums, participating in trade shows .
  • Target audience. Who to focus on when organizing sales. Who your client is by age, gender, occupation, income level. Where to find them and how to reach.
  • Promotion cost. How much will it cost to find and engage? How often you will have to run ads, what are the appropriate options to choose?

Financial indicators

This is where the financial side of your business is reflected, namely: future costs (product purchases, rentals, hiring, etc.), revenue, net profit, profitability, and return on the project.

Risk assessment

A list of major issues that a company may face, their potential consequences, and a plan of measures to minimize them.

Project summary

The most important part is a compact presentation of the contents of the entire document on several pages, it is important here to place the accents correctly, taking into account the addressee and the purpose of preparing the business plan.

Even though it is only a business plan for students, not the one you would present to a real investor, try to make it look realistic.

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  • Embedding enterprise and entrepreneurship in the vocational curriculum

Re-imagining the business plan for students

Re-imagining the business plan for students

While the terms ‘enterprise’ and ‘entrepreneurship’ are often used interchangeably, there is a distinct difference between them, especially within the context of technical, vocational education and training (TVET).

‘Enterprising’ activities, which many TVET providers already focus on, enable students to develop interpersonal skills such as leadership, motivation, critical thinking, problem-solving, teambuilding, communication and presentation skills. ‘Entrepreneurship’ takes this a step further by encouraging students to explore the opportunity of self-employment by starting a new enterprise. There is a strong focus on developing business ideas, business acumen and skills such as product development, market research, finance and planning, and on providing access to pre-incubation services and business networks.

At Northern Regional College, in Northern Ireland, we embarked on an international TVET partnership with colleges from Spain, Portugal and Finland to explore a new approach to making enterprise education more entrepreneurial. Our area of focus? The business plan.

Completion of a business plan is a key measure of success for many enterprise start-up agency support programmes. To attract capital investment, the business plan remains, rightly or wrongly, the measurement of the entrepreneur’s commitment to the short to medium-term future of their business.

While many TVET colleges seeking to develop entrepreneurial thinking and action amongst their students emphasise the importance of the business plan, it is proven to be the least popular and, consequently, least practiced activity amongst TVET students.

A NEW APPROACH TO BUSINESS PLANNING

In response, our Erasmus+ partnership, Enterprise is VITAL, is piloting a new business planning model using language relevant to TVET students. The approach focuses on five core entrepreneurial characteristics: Vision, Innovation, Teamwork, Achievement and Leadership.

The model is an adaptation from the international bestselling book Winning from Within by EA Fox (2013), which highlights four intrinsic characteristics that need to be understood and developed for success.

Interestingly, these characteristics link with the standard template business plan:

  • Dreamer : vision, innovation, creativity, star-gazing, future thinking, idea generation
  • Thinker : research, data – facts, risk analysis (acceptable loss-thinking), market research
  • Warrior : performance, tasks, to-do lists, deadlines, goals, milestones, plans
  • Lover : people, relationships, networks, communication, contacts, customers.

By focusing on these emotionally descriptive words, TVET students are better able to understand the critical skills required for embarking on a new venture. The term ‘Lover’ evokes a positive response, suggesting the importance of developing a long-lasting mutual relationship. The term ‘Thinker’ underlines the importance of making time for data gathering and analysis within busy schedules. ‘Warrior’ is a call to action. ‘Dreamer’ invites innovative solutions to problems.

Our TVET students have understood and adapted to this model extremely quickly. It has encouraged them to engage in lively debate, and to discuss their ideas through problem-based learning projects. All of this ultimately leads to the development of a business plan, without actually using the term ‘business plan’.

In addition to language and digital competence, the EU recognises that transversal competencies including a sense of initiative and entrepreneurship, learning to learn, cultural awareness and social and civic responsibility are required to make individuals more flexible and mobile, and, therefore, responsive to the needs of a modern economy ( Key Competences for Lifelong Learning , 2006). The programme content of any entrepreneurship programme must consider the level and extent to which these transversal competences are being addressed.

During the first year of Enterprise is VITAL, our students fully embraced these transversal competencies. Working in mixed international teams, they developed their business ideas and their market pitch proposal during a business planning competition in Spain, based on this visual model.

The judging panel, comprising of local business leaders, entrepreneurs and independent start-up agency experts from Spain and the UK, commended the students on ‘their clarity of vision, understanding of the market place and customer needs, realistic financial forecasts and doable actions’. The students were also congratulated for ‘their insights into their own weaknesses and how to build their social capital’, which the judges said was rarely included in an enterprise pitch. What more could you ask for from a successful  business plan?

To find out more about Enterprise is VITAL, contact Irvine Abraham at the Northern Regional College.

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11.4 The Business Plan

Learning objectives.

By the end of this section, you will be able to:

  • Describe the different purposes of a business plan
  • Describe and develop the components of a brief business plan
  • Describe and develop the components of a full business plan

Unlike the brief or lean formats introduced so far, the business plan is a formal document used for the long-range planning of a company’s operation. It typically includes background information, financial information, and a summary of the business. Investors nearly always request a formal business plan because it is an integral part of their evaluation of whether to invest in a company. Although nothing in business is permanent, a business plan typically has components that are more “set in stone” than a business model canvas , which is more commonly used as a first step in the planning process and throughout the early stages of a nascent business. A business plan is likely to describe the business and industry, market strategies, sales potential, and competitive analysis, as well as the company’s long-term goals and objectives. An in-depth formal business plan would follow at later stages after various iterations to business model canvases. The business plan usually projects financial data over a three-year period and is typically required by banks or other investors to secure funding. The business plan is a roadmap for the company to follow over multiple years.

Some entrepreneurs prefer to use the canvas process instead of the business plan, whereas others use a shorter version of the business plan, submitting it to investors after several iterations. There are also entrepreneurs who use the business plan earlier in the entrepreneurial process, either preceding or concurrently with a canvas. For instance, Chris Guillebeau has a one-page business plan template in his book The $100 Startup . 48 His version is basically an extension of a napkin sketch without the detail of a full business plan. As you progress, you can also consider a brief business plan (about two pages)—if you want to support a rapid business launch—and/or a standard business plan.

As with many aspects of entrepreneurship, there are no clear hard and fast rules to achieving entrepreneurial success. You may encounter different people who want different things (canvas, summary, full business plan), and you also have flexibility in following whatever tool works best for you. Like the canvas, the various versions of the business plan are tools that will aid you in your entrepreneurial endeavor.

Business Plan Overview

Most business plans have several distinct sections ( Figure 11.16 ). The business plan can range from a few pages to twenty-five pages or more, depending on the purpose and the intended audience. For our discussion, we’ll describe a brief business plan and a standard business plan. If you are able to successfully design a business model canvas, then you will have the structure for developing a clear business plan that you can submit for financial consideration.

Both types of business plans aim at providing a picture and roadmap to follow from conception to creation. If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept.

The full business plan is aimed at executing the vision concept, dealing with the proverbial devil in the details. Developing a full business plan will assist those of you who need a more detailed and structured roadmap, or those of you with little to no background in business. The business planning process includes the business model, a feasibility analysis, and a full business plan, which we will discuss later in this section. Next, we explore how a business plan can meet several different needs.

Purposes of a Business Plan

A business plan can serve many different purposes—some internal, others external. As we discussed previously, you can use a business plan as an internal early planning device, an extension of a napkin sketch, and as a follow-up to one of the canvas tools. A business plan can be an organizational roadmap , that is, an internal planning tool and working plan that you can apply to your business in order to reach your desired goals over the course of several years. The business plan should be written by the owners of the venture, since it forces a firsthand examination of the business operations and allows them to focus on areas that need improvement.

Refer to the business venture throughout the document. Generally speaking, a business plan should not be written in the first person.

A major external purpose for the business plan is as an investment tool that outlines financial projections, becoming a document designed to attract investors. In many instances, a business plan can complement a formal investor’s pitch. In this context, the business plan is a presentation plan, intended for an outside audience that may or may not be familiar with your industry, your business, and your competitors.

You can also use your business plan as a contingency plan by outlining some “what-if” scenarios and exploring how you might respond if these scenarios unfold. Pretty Young Professional launched in November 2010 as an online resource to guide an emerging generation of female leaders. The site focused on recent female college graduates and current students searching for professional roles and those in their first professional roles. It was founded by four friends who were coworkers at the global consultancy firm McKinsey. But after positions and equity were decided among them, fundamental differences of opinion about the direction of the business emerged between two factions, according to the cofounder and former CEO Kathryn Minshew . “I think, naively, we assumed that if we kicked the can down the road on some of those things, we’d be able to sort them out,” Minshew said. Minshew went on to found a different professional site, The Muse , and took much of the editorial team of Pretty Young Professional with her. 49 Whereas greater planning potentially could have prevented the early demise of Pretty Young Professional, a change in planning led to overnight success for Joshua Esnard and The Cut Buddy team. Esnard invented and patented the plastic hair template that he was selling online out of his Fort Lauderdale garage while working a full-time job at Broward College and running a side business. Esnard had hundreds of boxes of Cut Buddies sitting in his home when he changed his marketing plan to enlist companies specializing in making videos go viral. It worked so well that a promotional video for the product garnered 8 million views in hours. The Cut Buddy sold over 4,000 products in a few hours when Esnard only had hundreds remaining. Demand greatly exceeded his supply, so Esnard had to scramble to increase manufacturing and offered customers two-for-one deals to make up for delays. This led to selling 55,000 units, generating $700,000 in sales in 2017. 50 After appearing on Shark Tank and landing a deal with Daymond John that gave the “shark” a 20-percent equity stake in return for $300,000, The Cut Buddy has added new distribution channels to include retail sales along with online commerce. Changing one aspect of a business plan—the marketing plan—yielded success for The Cut Buddy.

Link to Learning

Watch this video of Cut Buddy’s founder, Joshua Esnard, telling his company’s story to learn more.

If you opt for the brief business plan, you will focus primarily on articulating a big-picture overview of your business concept. This version is used to interest potential investors, employees, and other stakeholders, and will include a financial summary “box,” but it must have a disclaimer, and the founder/entrepreneur may need to have the people who receive it sign a nondisclosure agreement (NDA) . The full business plan is aimed at executing the vision concept, providing supporting details, and would be required by financial institutions and others as they formally become stakeholders in the venture. Both are aimed at providing a picture and roadmap to go from conception to creation.

Types of Business Plans

The brief business plan is similar to an extended executive summary from the full business plan. This concise document provides a broad overview of your entrepreneurial concept, your team members, how and why you will execute on your plans, and why you are the ones to do so. You can think of a brief business plan as a scene setter or—since we began this chapter with a film reference—as a trailer to the full movie. The brief business plan is the commercial equivalent to a trailer for Field of Dreams , whereas the full plan is the full-length movie equivalent.

Brief Business Plan or Executive Summary

As the name implies, the brief business plan or executive summary summarizes key elements of the entire business plan, such as the business concept, financial features, and current business position. The executive summary version of the business plan is your opportunity to broadly articulate the overall concept and vision of the company for yourself, for prospective investors, and for current and future employees.

A typical executive summary is generally no longer than a page, but because the brief business plan is essentially an extended executive summary, the executive summary section is vital. This is the “ask” to an investor. You should begin by clearly stating what you are asking for in the summary.

In the business concept phase, you’ll describe the business, its product, and its markets. Describe the customer segment it serves and why your company will hold a competitive advantage. This section may align roughly with the customer segments and value-proposition segments of a canvas.

Next, highlight the important financial features, including sales, profits, cash flows, and return on investment. Like the financial portion of a feasibility analysis, the financial analysis component of a business plan may typically include items like a twelve-month profit and loss projection, a three- or four-year profit and loss projection, a cash-flow projection, a projected balance sheet, and a breakeven calculation. You can explore a feasibility study and financial projections in more depth in the formal business plan. Here, you want to focus on the big picture of your numbers and what they mean.

The current business position section can furnish relevant information about you and your team members and the company at large. This is your opportunity to tell the story of how you formed the company, to describe its legal status (form of operation), and to list the principal players. In one part of the extended executive summary, you can cover your reasons for starting the business: Here is an opportunity to clearly define the needs you think you can meet and perhaps get into the pains and gains of customers. You also can provide a summary of the overall strategic direction in which you intend to take the company. Describe the company’s mission, vision, goals and objectives, overall business model, and value proposition.

Rice University’s Student Business Plan Competition, one of the largest and overall best-regarded graduate school business-plan competitions (see Telling Your Entrepreneurial Story and Pitching the Idea ), requires an executive summary of up to five pages to apply. 51 , 52 Its suggested sections are shown in Table 11.2 .

Are You Ready?

Create a brief business plan.

Fill out a canvas of your choosing for a well-known startup: Uber, Netflix, Dropbox, Etsy, Airbnb, Bird/Lime, Warby Parker, or any of the companies featured throughout this chapter or one of your choice. Then create a brief business plan for that business. See if you can find a version of the company’s actual executive summary, business plan, or canvas. Compare and contrast your vision with what the company has articulated.

  • These companies are well established but is there a component of what you charted that you would advise the company to change to ensure future viability?
  • Map out a contingency plan for a “what-if” scenario if one key aspect of the company or the environment it operates in were drastically is altered?

Full Business Plan

Even full business plans can vary in length, scale, and scope. Rice University sets a ten-page cap on business plans submitted for the full competition. The IndUS Entrepreneurs , one of the largest global networks of entrepreneurs, also holds business plan competitions for students through its Tie Young Entrepreneurs program. In contrast, business plans submitted for that competition can usually be up to twenty-five pages. These are just two examples. Some components may differ slightly; common elements are typically found in a formal business plan outline. The next section will provide sample components of a full business plan for a fictional business.

Executive Summary

The executive summary should provide an overview of your business with key points and issues. Because the summary is intended to summarize the entire document, it is most helpful to write this section last, even though it comes first in sequence. The writing in this section should be especially concise. Readers should be able to understand your needs and capabilities at first glance. The section should tell the reader what you want and your “ask” should be explicitly stated in the summary.

Describe your business, its product or service, and the intended customers. Explain what will be sold, who it will be sold to, and what competitive advantages the business has. Table 11.3 shows a sample executive summary for the fictional company La Vida Lola.

Business Description

This section describes the industry, your product, and the business and success factors. It should provide a current outlook as well as future trends and developments. You also should address your company’s mission, vision, goals, and objectives. Summarize your overall strategic direction, your reasons for starting the business, a description of your products and services, your business model, and your company’s value proposition. Consider including the Standard Industrial Classification/North American Industry Classification System (SIC/NAICS) code to specify the industry and insure correct identification. The industry extends beyond where the business is located and operates, and should include national and global dynamics. Table 11.4 shows a sample business description for La Vida Lola.

Industry Analysis and Market Strategies

Here you should define your market in terms of size, structure, growth prospects, trends, and sales potential. You’ll want to include your TAM and forecast the SAM . (Both these terms are discussed in Conducting a Feasibility Analysis .) This is a place to address market segmentation strategies by geography, customer attributes, or product orientation. Describe your positioning relative to your competitors’ in terms of pricing, distribution, promotion plan, and sales potential. Table 11.5 shows an example industry analysis and market strategy for La Vida Lola.

Competitive Analysis

The competitive analysis is a statement of the business strategy as it relates to the competition. You want to be able to identify who are your major competitors and assess what are their market shares, markets served, strategies employed, and expected response to entry? You likely want to conduct a classic SWOT analysis (Strengths Weaknesses Opportunities Threats) and complete a competitive-strength grid or competitive matrix. Outline your company’s competitive strengths relative to those of the competition in regard to product, distribution, pricing, promotion, and advertising. What are your company’s competitive advantages and their likely impacts on its success? The key is to construct it properly for the relevant features/benefits (by weight, according to customers) and how the startup compares to incumbents. The competitive matrix should show clearly how and why the startup has a clear (if not currently measurable) competitive advantage. Some common features in the example include price, benefits, quality, type of features, locations, and distribution/sales. Sample templates are shown in Figure 11.17 and Figure 11.18 . A competitive analysis helps you create a marketing strategy that will identify assets or skills that your competitors are lacking so you can plan to fill those gaps, giving you a distinct competitive advantage. When creating a competitor analysis, it is important to focus on the key features and elements that matter to customers, rather than focusing too heavily on the entrepreneur’s idea and desires.

Operations and Management Plan

In this section, outline how you will manage your company. Describe its organizational structure. Here you can address the form of ownership and, if warranted, include an organizational chart/structure. Highlight the backgrounds, experiences, qualifications, areas of expertise, and roles of members of the management team. This is also the place to mention any other stakeholders, such as a board of directors or advisory board(s), and their relevant relationship to the founder, experience and value to help make the venture successful, and professional service firms providing management support, such as accounting services and legal counsel.

Table 11.6 shows a sample operations and management plan for La Vida Lola.

Marketing Plan

Here you should outline and describe an effective overall marketing strategy for your venture, providing details regarding pricing, promotion, advertising, distribution, media usage, public relations, and a digital presence. Fully describe your sales management plan and the composition of your sales force, along with a comprehensive and detailed budget for the marketing plan. Table 11.7 shows a sample marketing plan for La Vida Lola.

Financial Plan

A financial plan seeks to forecast revenue and expenses; project a financial narrative; and estimate project costs, valuations, and cash flow projections. This section should present an accurate, realistic, and achievable financial plan for your venture (see Entrepreneurial Finance and Accounting for detailed discussions about conducting these projections). Include sales forecasts and income projections, pro forma financial statements ( Building the Entrepreneurial Dream Team , a breakeven analysis, and a capital budget. Identify your possible sources of financing (discussed in Conducting a Feasibility Analysis ). Figure 11.19 shows a template of cash-flow needs for La Vida Lola.

Entrepreneur In Action

Laughing man coffee.

Hugh Jackman ( Figure 11.20 ) may best be known for portraying a comic-book superhero who used his mutant abilities to protect the world from villains. But the Wolverine actor is also working to make the planet a better place for real, not through adamantium claws but through social entrepreneurship.

A love of java jolted Jackman into action in 2009, when he traveled to Ethiopia with a Christian humanitarian group to shoot a documentary about the impact of fair-trade certification on coffee growers there. He decided to launch a business and follow in the footsteps of the late Paul Newman, another famous actor turned philanthropist via food ventures.

Jackman launched Laughing Man Coffee two years later; he sold the line to Keurig in 2015. One Laughing Man Coffee café in New York continues to operate independently, investing its proceeds into charitable programs that support better housing, health, and educational initiatives within fair-trade farming communities. 55 Although the New York location is the only café, the coffee brand is still distributed, with Keurig donating an undisclosed portion of Laughing Man proceeds to those causes (whereas Jackman donates all his profits). The company initially donated its profits to World Vision, the Christian humanitarian group Jackman accompanied in 2009. In 2017, it created the Laughing Man Foundation to be more active with its money management and distribution.

  • You be the entrepreneur. If you were Jackman, would you have sold the company to Keurig? Why or why not?
  • Would you have started the Laughing Man Foundation?
  • What else can Jackman do to aid fair-trade practices for coffee growers?

What Can You Do?

Textbooks for change.

Founded in 2014, Textbooks for Change uses a cross-compensation model, in which one customer segment pays for a product or service, and the profit from that revenue is used to provide the same product or service to another, underserved segment. Textbooks for Change partners with student organizations to collect used college textbooks, some of which are re-sold while others are donated to students in need at underserved universities across the globe. The organization has reused or recycled 250,000 textbooks, providing 220,000 students with access through seven campus partners in East Africa. This B-corp social enterprise tackles a problem and offers a solution that is directly relevant to college students like yourself. Have you observed a problem on your college campus or other campuses that is not being served properly? Could it result in a social enterprise?

Work It Out

Franchisee set out.

A franchisee of East Coast Wings, a chain with dozens of restaurants in the United States, has decided to part ways with the chain. The new store will feature the same basic sports-bar-and-restaurant concept and serve the same basic foods: chicken wings, burgers, sandwiches, and the like. The new restaurant can’t rely on the same distributors and suppliers. A new business plan is needed.

  • What steps should the new restaurant take to create a new business plan?
  • Should it attempt to serve the same customers? Why or why not?

This New York Times video, “An Unlikely Business Plan,” describes entrepreneurial resurgence in Detroit, Michigan.

  • 48 Chris Guillebeau. The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future . New York: Crown Business/Random House, 2012.
  • 49 Jonathan Chan. “What These 4 Startup Case Studies Can Teach You about Failure.” Foundr.com . July 12, 2015. https://foundr.com/4-startup-case-studies-failure/
  • 50 Amy Feldman. “Inventor of the Cut Buddy Paid YouTubers to Spark Sales. He Wasn’t Ready for a Video to Go Viral.” Forbes. February 15, 2017. https://www.forbes.com/sites/forbestreptalks/2017/02/15/inventor-of-the-cut-buddy-paid-youtubers-to-spark-sales-he-wasnt-ready-for-a-video-to-go-viral/#3eb540ce798a
  • 51 Jennifer Post. “National Business Plan Competitions for Entrepreneurs.” Business News Daily . August 30, 2018. https://www.businessnewsdaily.com/6902-business-plan-competitions-entrepreneurs.html
  • 52 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition . March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf
  • 53 “Rice Business Plan Competition, Eligibility Criteria and How to Apply.” Rice Business Plan Competition. March 2020. https://rbpc.rice.edu/sites/g/files/bxs806/f/2020%20RBPC%20Eligibility%20Criteria%20and%20How%20to%20Apply_23Oct19.pdf; Based on 2019 RBPC Competition Rules and Format April 4–6, 2019. https://rbpc.rice.edu/sites/g/files/bxs806/f/2019-RBPC-Competition-Rules%20-Format.pdf
  • 54 Foodstart. http://foodstart.com
  • 55 “Hugh Jackman Journey to Starting a Social Enterprise Coffee Company.” Giving Compass. April 8, 2018. https://givingcompass.org/article/hugh-jackman-journey-to-starting-a-social-enterprise-coffee-company/

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What Is a Business Plan?

Understanding business plans, how to write a business plan, common elements of a business plan, how often should a business plan be updated, the bottom line, business plan: what it is, what's included, and how to write one.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master's in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem.

what is the importance of a business plan to students

A business plan is a document that details a company's goals and how it intends to achieve them. Business plans can be of benefit to both startups and well-established companies. For startups, a business plan can be essential for winning over potential lenders and investors. Established businesses can find one useful for staying on track and not losing sight of their goals. This article explains what an effective business plan needs to include and how to write one.

Key Takeaways

  • A business plan is a document describing a company's business activities and how it plans to achieve its goals.
  • Startup companies use business plans to get off the ground and attract outside investors.
  • For established companies, a business plan can help keep the executive team focused on and working toward the company's short- and long-term objectives.
  • There is no single format that a business plan must follow, but there are certain key elements that most companies will want to include.

Investopedia / Ryan Oakley

Any new business should have a business plan in place prior to beginning operations. In fact, banks and venture capital firms often want to see a business plan before they'll consider making a loan or providing capital to new businesses.

Even if a business isn't looking to raise additional money, a business plan can help it focus on its goals. A 2017 Harvard Business Review article reported that, "Entrepreneurs who write formal plans are 16% more likely to achieve viability than the otherwise identical nonplanning entrepreneurs."

Ideally, a business plan should be reviewed and updated periodically to reflect any goals that have been achieved or that may have changed. An established business that has decided to move in a new direction might create an entirely new business plan for itself.

There are numerous benefits to creating (and sticking to) a well-conceived business plan. These include being able to think through ideas before investing too much money in them and highlighting any potential obstacles to success. A company might also share its business plan with trusted outsiders to get their objective feedback. In addition, a business plan can help keep a company's executive team on the same page about strategic action items and priorities.

Business plans, even among competitors in the same industry, are rarely identical. However, they often have some of the same basic elements, as we describe below.

While it's a good idea to provide as much detail as necessary, it's also important that a business plan be concise enough to hold a reader's attention to the end.

While there are any number of templates that you can use to write a business plan, it's best to try to avoid producing a generic-looking one. Let your plan reflect the unique personality of your business.

Many business plans use some combination of the sections below, with varying levels of detail, depending on the company.

The length of a business plan can vary greatly from business to business. Regardless, it's best to fit the basic information into a 15- to 25-page document. Other crucial elements that take up a lot of space—such as applications for patents—can be referenced in the main document and attached as appendices.

These are some of the most common elements in many business plans:

  • Executive summary: This section introduces the company and includes its mission statement along with relevant information about the company's leadership, employees, operations, and locations.
  • Products and services: Here, the company should describe the products and services it offers or plans to introduce. That might include details on pricing, product lifespan, and unique benefits to the consumer. Other factors that could go into this section include production and manufacturing processes, any relevant patents the company may have, as well as proprietary technology . Information about research and development (R&D) can also be included here.
  • Market analysis: A company needs to have a good handle on the current state of its industry and the existing competition. This section should explain where the company fits in, what types of customers it plans to target, and how easy or difficult it may be to take market share from incumbents.
  • Marketing strategy: This section can describe how the company plans to attract and keep customers, including any anticipated advertising and marketing campaigns. It should also describe the distribution channel or channels it will use to get its products or services to consumers.
  • Financial plans and projections: Established businesses can include financial statements, balance sheets, and other relevant financial information. New businesses can provide financial targets and estimates for the first few years. Your plan might also include any funding requests you're making.

The best business plans aren't generic ones created from easily accessed templates. A company should aim to entice readers with a plan that demonstrates its uniqueness and potential for success.

2 Types of Business Plans

Business plans can take many forms, but they are sometimes divided into two basic categories: traditional and lean startup. According to the U.S. Small Business Administration (SBA) , the traditional business plan is the more common of the two.

  • Traditional business plans : These plans tend to be much longer than lean startup plans and contain considerably more detail. As a result they require more work on the part of the business, but they can also be more persuasive (and reassuring) to potential investors.
  • Lean startup business plans : These use an abbreviated structure that highlights key elements. These business plans are short—as short as one page—and provide only the most basic detail. If a company wants to use this kind of plan, it should be prepared to provide more detail if an investor or a lender requests it.

Why Do Business Plans Fail?

A business plan is not a surefire recipe for success. The plan may have been unrealistic in its assumptions and projections to begin with. Markets and the overall economy might change in ways that couldn't have been foreseen. A competitor might introduce a revolutionary new product or service. All of this calls for building some flexibility into your plan, so you can pivot to a new course if needed.

How frequently a business plan needs to be revised will depend on the nature of the business. A well-established business might want to review its plan once a year and make changes if necessary. A new or fast-growing business in a fiercely competitive market might want to revise it more often, such as quarterly.

What Does a Lean Startup Business Plan Include?

The lean startup business plan is an option when a company prefers to give a quick explanation of its business. For example, a brand-new company may feel that it doesn't have a lot of information to provide yet.

Sections can include: a value proposition ; the company's major activities and advantages; resources such as staff, intellectual property, and capital; a list of partnerships; customer segments; and revenue sources.

A business plan can be useful to companies of all kinds. But as a company grows and the world around it changes, so too should its business plan. So don't think of your business plan as carved in granite but as a living document designed to evolve with your business.

Harvard Business Review. " Research: Writing a Business Plan Makes Your Startup More Likely to Succeed ."

U.S. Small Business Administration. " Write Your Business Plan ."

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  • How to Do Market Research, Types, and Example 2 of 25
  • Marketing Strategy: What It Is, How It Works, and How to Create One 3 of 25
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  • Business Plan: What It Is, What's Included, and How to Write One 7 of 25
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what is the importance of a business plan to students

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6 Reasons You Really Need to Write A Business Plan

Published: October 14, 2020

Starting a busine ss can be a daunting task, especially if you’re starting from square one.

marketer writing a business plan

It’s easy to feel stuck in the whirlwind of things you’ll need to do, like registering your company, building a team, advertising, the list goes on. Not to mention, a business idea with no foundation can make the process seem incredibly intimidating.

Thankfully, business plans are an antidote for the new business woes that many entrepreneurs feel. Some may shy away from the idea, as they are lengthy documents that require a significant amount of attention and care.

However, there’s a reason why those who take the time to write out a business plan are 16% more likely to be successful than those who don’t. In other words, business plans work.

→ Download Now: Free Business Plan Template

What is a business plan, and why does it matter?

In brief, a business plan is a roadmap to success. It's a blueprint for entrepreneurs to follow that helps them outline, understand, and cohesively achieve their goals.

Writing a business plan involves defining critical aspects of your business, like brand messaging, conducting market research, and creating pricing strategies — all before starting the company.

A business plan can also increase your confidence. You’ll get a holistic view of your idea and understand whether it's worth pursuing.

So, why not take the time to create a blueprint that will make your job easier? Let’s take a look at six reasons why you should write a business plan before doing anything else.

Six Reasons You Really Need To Write a Business Plan

  • Legitimize your business idea.
  • Give your business a foundation for success.
  • Obtain funding and investments.
  • Hire the right people.
  • Communicate your needs.
  • It makes it easier to sell your business.

1. Legitimize your business idea.

Pursuing business ideas that stem from passions you’ve had for years can be exciting, but that doesn’t necessarily mean it’s a sound venture.

One of the first things a business plan requires you to do is research your target market. You’ll gain a nuanced understanding of industry trends and what your competitors have done, or not, to succeed. You may find that the idea you have when you start is not likely to be successful.

That may feel disheartening, but you can always modify your original idea to better fit market needs. The more you understand about the industry, your future competitors, and your prospective customers, the greater the likelihood of success. If you identify issues early on, you can develop strategies to deal with them rather than troubleshooting as they happen.

It’s better to know sooner rather than later if your business will be successful before investing time and money.

2. Give your business a foundation for success.

Let's say you’re looking to start a clean beauty company. There are thousands of directions you can go in, so just saying, “I’m starting a clean beauty company!” isn’t enough.

You need to know what specific products you want to make, and why you’re deciding to create them. The Pricing and Product Line style="color: #33475b;"> section of a business plan requires you to identify these elements, making it easier to plan for other components of your business strategy.

You’ll also use your initial market research to outline financial projections, goals, objectives, and operational needs. Identifying these factors ahead of time creates a strong foundation, as you’ll be making critical business decisions early on.

You can refer back to the goals you’ve set within your business plan to track your progress over time and prioritize areas that need extra attention.

All in all, every section of your business plan requires you to go in-depth into your future business strategy before even acting on any of those plans. Having a plan at the ready gives your business a solid foundation for growth.

When you start your company, and your product reaches the market, you’ll spend less time troubleshooting and more time focusing on your target audiences and generating revenue.

3. Obtain funding and investments.

Every new business needs capital to get off the ground. Although it would be nice, banks won’t finance loans just because you request one. They want to know what the money is for, where it’s going, and if you’ll eventually be able to pay it back.

If you want investors to be part of your financing plan, they’ll have questions about your business’ pricing strategies and revenue models. Investors can also back out if they feel like their money isn’t put to fair use. They’ll want something to refer back to track your progress over time and understand if you’re meeting the goals you told them you’d meet. They want to know if their investment was worthwhile.

The Financial Considerations section of a business plan will prompt you to estimate costs ahead of time and establish revenue objectives before applying for loans or speaking to investors.

You’ll secure and finalize your strategy in advance to avoid showing up unprepared for meetings with potential investors.

4. Hire the right people.

After you’ve completed your business plan and you have a clear view of your strategies, goals, and financial needs, there may be milestones you need to meet that require skills you don’t yet have. You may need to hire new people to fill in the gaps.

Having a strategic plan to share with prospective partners and employees can prove that they aren’t signing on to a sinking ship.

If your plans are summarized and feasible, they’ll understand why you want them on your team, and why they should agree to work with you.

5. Communicate your needs.

If you don’t understand how your business will run, it’ll be hard to communicate your business’s legitimacy to all involved parties.

Your plan will give you a well-rounded view of how your business will work, and make it easier for you to communicate this to others.

You may have already secured financing from banks and made deals with investors, but a business’ needs are always changing. While your business grows, you’ll likely need more financial support, more partners, or just expand your services and product offers. Using your business plan as a measure of how you’ve met your goals can make it easier to bring people onto your team at all stages of the process.

6. It makes it easier to sell your business.

A buyer won’t want to purchase a business that will run into the ground after signing the papers. They want a successful, established company.

A business plan that details milestones you can prove you’ve already met can be used to show prospective buyers how you’ve generated success within your market. You can use your accomplishments to negotiate higher price points aligned with your business’ value.

A Business Plan Is Essential

Ultimately, having a business plan can increase your confidence in your new venture. You’ll understand what your business needs to succeed, and outline the tactics you’ll use to achieve those goals.

Some people have a lifetime goal of turning their passions into successful business ventures, and a well-crafted business plan can make those dreams come true.

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The Undeniable Importance of a Business Plan

We often hear about business plans in the context of early-stage companies; however, constructing excellent business plans is difficult and time-consuming, so many entrepreneurs avoid them. But, is this a mistake?

While most people may be aware of the “soft” arguments for and against writing a business plan, in this article, a Toptal Finance Expert takes a data-driven approach to addressing the debate. In it, he finds strong evidence to support the notion that writing an excellent business plan is time well spent.

The Undeniable Importance of a Business Plan

By Sean Heberling

Sean has analyzed 10,000+ companies, built complex models, and helped facilitate $1+ billion in investment transactions.

PREVIOUSLY AT

Executive Summary

  • Individuals who write business plans are 2.5x as likely to start businesses.
  • Business planning improves corporate executive satisfaction with corporate strategy development.
  • Angels and venture capitalists value business plans and their [financial models](https://www.toptal.com/finance/tutorials/what-is-a-financial-model).
  • Companies who complete business plans are 2.5x as likely to get funded.
  • Even if a small-scale early-stage venture seeking just $250,000 in capital spent almost $40,000 on business planning and another almost $40,000 on capital raising, it should still expect to "break even" on a probability-weighted basis.
  • Larger early-stage ventures enjoy extraordinary probability-weighted returns on investment from business planning. Because the target net capital so greatly exceeds the money spent on business planning, the prospective ROI is huge.
  • Company Overview: An explanation of why your company is relevant and the need you are addressing.
  • Market Overview: A description of the state of your market and its important trends, a detailed description of your customers, and a description of your current competitors and their advantages.
  • Product/Service Overview: A description of your product(s), how they compete with other brands, why they are needed, and why customers will pay a fair economic value for it.
  • Financial Projections: Three thorough financial plans with conservative, moderate, and optimistic assumptions.
  • The process of writing forces the author to ask introspectively how they reached their conclusions and each of the sub-conclusions along the way because they must explain their logic to a cynical reader.
  • The written author needs to support all conclusions with facts and logic to prove that they are not "making it up" or relying upon popular "myths."
  • Outlined reports and outlined business plans are not generally subject to the same level of reader scrutiny.

We often hear about business plans in the context of early-stage companies , but constructing excellent business plans is difficult and time-consuming, so many entrepreneurs avoid them. That’s a mistake, as there is strong evidence demonstrating that business plans generate positive returns on time and money invested .

The business world has long debated the importance of business plans, and most involved understand the “soft” arguments. However, this article delves into the data to conclude that writing an excellent business plan is time well spent. I developed a similar view over my 20+ year financial career , during which I have analyzed well over 10,000 different types of companies. I have noticed that while a business plan may not be required for a venture to become successful, having one does seem to greatly improve the probability of successful outcomes.

Expert Opinions Support the Value of Business Planning

Expert opinions support the four following conclusions:

  • Angels and venture capitalists value business plans and their financial models.

Individuals Who Write Business Plans Are 2.5x More Likely to Become Entrepreneurs

Many people have business ideas over the course of their careers, but often, these ideas never come to fruition, or they get lost amidst our daily obligations. Interestingly, studies support the notion that those who write business plans are far more likely to launch their companies. Data from the Panal Study of Entrepreneurial Dynamics in fact suggests that business planners were 2.5x as likely to get into business . The study, which surveyed more than 800 people across the United States who were in the process of starting businesses, therefore concluded that “writing a plan greatly increased the chances that a person would actually go into business.”

Of course, causation of this phenomenon is hard to pin down. There are several different possible reasons why this correlation between writing business plans and actually starting a business may exist. But William Gartner, Clemson University Entrepreneurship Professor and author of the Panal Study, believes that “‘research shows that business plans are all about walking the walk. People who write business plans also do more stuff.’ And doing more stuff, such as researching markets and preparing projections, increases the chances an entrepreneur will follow through.”

Research shows that business plans are all about walking the walk. People who write business plans also do more stuff. And doing more stuff, such as researching markets and preparing projections, increases the chances an entrepreneur will follow through.

William Bygrave, a professor emeritus at Babson College, reached a similar conclusion despite having previously shown “that entrepreneurs who began with formal plans had no greater success than those who started without them.” Bygrave does admit, however, that “40% of Babson students who have taken the college’s business plan writing course go on to start businesses after graduation, twice the rate of those who didn’t study plan writing.”

Business Planning Improves Corporate Executive Satisfaction

Another important way in which business plans can provide tangible help is by aligning everyone in an organization with the vision and strategy going forward. And this, in turn, has important ramifications on corporate executive satisfaction. A study by McKinsey & Company which surveyed nearly 800 corporate executives across a range of industries confirms this conclusion. In it, McKinsey found that “formal strategic-planning processes play an important role in improving overall satisfaction with strategy development. That role can be seen in the responses of the 79 percent of managers who claimed that the formal planning process played a significant role in developing strategies and were satisfied with the approach of their companies, compared with only 21 percent of the respondents who felt that the process did not play a significant role. Looked at another way, 51% of the respondents whose companies had no formal process were dissatisfied with their approach to the development of strategy, against only 20% of those at companies with a formal process.”

A chart of what role the formal planning process plays in a company next to a chart showing the percentage of respondents who are dissatisfied with their company's approach to the development of strategy

Of course, not all planning is equal. Planning just for the sake of planning doesn’t have the desired effects. As McKinsey itself noted in their study, “Just 45% of the respondents said they were satisfied with the strategic planning process. Moreover, only 23% indicated that major strategic decisions were made within its confines. Given these results, managers might well be tempted to jettison the planning process altogether.” As such, entrepreneurs and business managers should take the time and effort required to put together a well-written and well-researched business plan. Later in the article, I outline some of the elements of a well-written plan.

Business Plans and Their Financial Models Are Valuable to Angels and Venture Capitalists

Many entrepreneurs will eventually need to raise outside capital to grow and develop their businesses. In my experience, a business plan is a crucial tool in maximizing the chances of raising money from external investors. A well-written plan not only helps investors understand your business and your vision, but also shows them that you’ve taken the time to carefully assess and think through the issues your business will face, as well as the more detailed questions surrounding the economics and fundamentals of your business model.

Nathan Beckford, CFA, is the CEO of FounderSuite, the funding stack used by startups in Y Combinator, TechStars, 500s, and more to raise over $750 million. Nathan illustrates the above point nicely in an email he wrote to me recently: “Prior to starting Foundersuite.com, I ran a startup consulting business called VentureArchetypes.com. For the first few years, our primary business was cranking out bold, bullish, beautifully-written business plans for startups to present to investors. Around the mid-2000s, business plans started to go out of favor as the ‘Lean Startup’ methodology became popular. Instead of a written plan, we saw a huge uptick in demand for detailed financial models. Bottom line, I still see value in taking time to be contemplative and strategic before launching a startup. Does that need to be in the form of a 40-page written document? No. But if that’s the format that best works for you, and it can help you model scenarios and ‘see around the corner’ then that’s valuable.”

Nathan and I have frequently interacted, as I maintain a subscription to FounderSuite, software I use when running capital campaigns for early-stage companies on whose boards I sit, or when raising capital for my own firm’s investment projects. Nathan’s feedback is helpful, as he frequently interacts with thousands of entrepreneurs simultaneously running capital campaigns, providing him with a great perspective on which approaches work and which don’t. Clearly, he sees that financial models and business plans in some form help entrepreneurs raise capital.

Companies Who Complete Business Plans Are 2.5x as Likely to Get Funded

Following the section above, naturally, if business plans are useful to outside investors, these are therefore likely to also increase one’s chances of successfully raising capital. A study by Palo Alto Software confirms this hypothesis. The study showed that although 65% of entrepreneurs had NOT completed business plans, the ones who had were twice as likely to have secured funding for their businesses.

A chart comparing elements of companies with business plans to companies with no business plan

This study surveyed 2,877 entrepreneurs. Of those, 995 had completed business plans, with 297 of them (30%) having secured loans, 280 of them (28%) having secured investment capital, and 499 of them (50%) having grown their businesses. Contrast these percentages with the results for the 1,882 entrepreneurs who had not completed business plans, where just 222 of them (12%) had secured loans, 219 of them (12%) had secured investment capital, and 501 of them (27%) had grown their businesses. (Note that the percentages among the business plan population sum to over 100% because of some overlap between each of the sub-categories.) These results led the study authors to conclude that “Except in a small number of cases, business planning appeared to be positively correlated with business success as measured by our variables. While our analysis cannot say that completing a business plan will lead to success, it does indicate that the type of entrepreneur who completes a business plan is also more likely to run a successful business.”

Calculating the Return on Investment for Business Planning

The data and studies outlined above all serve to prove something that I have come to understand very clearly throughout my career. Nevertheless, I still often find that startups struggle with the idea of having to put together a business plan, and in particular with the option of hiring an outside professional to help them do that. As such, I quantified the ROI of such an activity, using data and numbers based on my many years of business consulting. The results of the exercise are summarized in the table at the end of the section, but there are two overarching conclusions:

  • Even a small-scale early-stage company can “afford” to pay a finance expert $191 per hour both to create a business plan and to guide the capital raising process, at worst “breaking even” on the investment.
  • Larger early-stage companies can expect significant returns on investments in business planning, perhaps as much as 6,700% (67x the amount of money invested).

Diving into the analysis, my inputs included:

  • My professional experience with writing business plans. I have spent 25 - 200 hours apiece creating business plans I feel comfortable sharing with founders, advisors, and investors.
  • Data from the Palo Alto study discussed earlier in this article. This study showed that 30% of early-stage ventures with business plans had secured funding, 2.5x as great as the 12% of early-stage ventures without business plans who managed to secure funding despite the absence of such plans.
  • The hourly rate for a finance expert x (150 to 200 hours) for one round of financing, OR
  • 10% of the amount of capital targeted

My analysis illustrates the following:

  • Early-stage companies should expect to spend $4,000 - $40,000 on business planning, including the financial modeling associated with it.
  • Early-stage companies should expect to spend $30,000 - $200,000 for an initial round of financing between $250,000 and $2 million in size, resulting in net financing of $200,000 - $1.8 million.
  • Even if a small-scale early-stage venture seeking just $250,000 in capital spent almost $40,000 on business planning and another almost $40,000 on capital raising, it should still expect to “break even” on a probability-weighted basis. In other words, because the odds of success with a professional business plan are 2.5x greater than without one, small-scale early-stage ventures can justify such a significant investment. This also assumes NO additional odds for success from engaging a professional to coordinate the fundraising effort. I suspect that doing so may push the odds of success from 12% without a business plan and 30% with a business plan to above 50%. It is also likely that a smaller-scale venture may require significantly fewer hours for business planning and capital raising that what is outlined in the “worst case” below.
  • Larger early-stage ventures enjoy extraordinary probability-weighted returns on investment from business planning. Because the target net capital so greatly exceeds the money spent on business planning, the prospective ROI is huge, and this analysis just assumes ONE round of equity financing. Most successful startups will experience several rounds of financing.

A table showing calculations on return of investment in business planning

Thoughts on Writing an Excellent Business Plan

An extensive overview of how to write an excellent business plan is beyond the scope of this article. However, here are two key thoughts that have emerged from my years of experience with startups.

First, there are four common elements to an excellent business plan. In Alan Hall’s Forbes article, “ How to Build a Billion Dollar Business Plan: 10 Top Points ,” he interviews Thomas Harrison, Chairman of Diversified Agency Services, an Omnicom division that has purchased “a vast number of firms,” to share his views on the key elements of a great business plan. Although each of these ten elements is essential, I reorganized the list into four broad categories:

1. Company Overview

  • An explanation of why your company is relevant and the need are you addressing
  • A description of corporate priorities and the processes to achieve them.
  • An overview of the various resources, including the people that will be needed, to deliver what’s expected by the customer.

2. Market Overview

  • A description of the state of your market and its important trends.
  • A detailed description of your customers.
  • A description of your current competitors and their advantages. Which ones will you displace?

3. Product/Service Overview

  • A description of your products, how they compete with other brands, and why they are needed.
  • An explanation of why customers will pay a fair economic value for your product or service. This element is conspicuously absent from some of today’s most expensive unicorns. Companies such as Uber and Tesla are losing massive amounts of money on rapidly growing sales because these companies may not be selling their services/products for fair economic value. Of course, sales grow rapidly when customers can buy your services/products for far less than their fair economic values!

4. Financial Projections

  • Conservative
  • Each scenario should have realistic and achievable sales, margins, expenses, and profits on monthly, quarterly, and annual bases. Again, these elements appear to be conspicuously absent from some of today’s most expensive unicorns.

A diagram showing four key elements to an excellent business plan

Second, written business plans are superior to those just “outlined.” As an adjunct professor of finance for Villanova University, I require my students to write research reports prior to developing slide decks to present their findings from a full semester of industry research. The process of writing forces the authors to ask themselves how they reached their conclusions and each of the sub-conclusions along the way because they must explain their logic to cynical readers. The written authors need to support their conclusions with facts and logic to prove that they are not “making it up” or relying upon popular “myths.” Outlined reports and outlined business plans are not generally subject to the same level of reader scrutiny. Therefore, written business plans are superior to those just “outlined.” Outlined plans are often kept on 10-12 slide decks, and the slide deck is an important tool in the capital raising process, but the written business plan that stands behind it will differentiate an entrepreneur from their seemingly infinite competition.

Parting Thoughts

Some argue that many public multi-billion-dollar companies such as Apple or Google never had formal business plans before they started, but this argument is flawed because most of these companies likely developed business plans either during the solicitation of venture capital or during the process of going public. Apple and Google were both funded with venture capital, and soliciting venture capital involves business planning. The founders of Apple and Google likely created financial projections and outlined strategic paths.

Moreover, Apple and Google are both public companies, and going public involves business planning. Underwriters employ research analysts creating financial forecasts based on business plans projected by management at the companies going public. Buy-side firms purchasing and holding shares in newly public companies create forecasts based upon the business plans projected by public company management teams.

Admittedly, you don’t need a written business plan to have a successful company. You may not even need a business plan at all to have a successful company. However, the probability of success without a business plan is much lower. Angels and venture capitalists like to know about your business plan, and public companies need to project business plans to persuade underwriters and investors to purchase their securities.

Further Reading on the Toptal Blog:

  • Creating a Narrative from Numbers
  • Business Plan Consultants: Who They Are and How They Create Value
  • Building a Business Continuity Plan
  • Building the Next Big Thing: A Guide to Business Idea Development
  • Mission Statements: How Effectively Used Intangible Assets Create Corporate Value

Understanding the basics

Why it is important to have a business plan.

Expert opinions and numerous studies show that business plans improve corporate satisfaction, are useful for angel investors and venture capitalists, and increase a company’s chances of raising capital by 2.5x.

What are the benefits of a business plan?

Individuals who write business plans are 2.5x as likely to start businesses. Moreover, business planning improves corporate executive satisfaction with corporate strategy development. Finally, investors value business plans, making the chances of raising capital 2.5x greater.

What does an investor look for in a business plan?

The four key sections of a business plan are: the company overview, a market overview, your product/service overview, and the financial projections.

  • BusinessPlan

Sean Heberling

Bryn Mawr, PA, United States

Member since October 18, 2017

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what is the importance of a business plan to students

The importance of a business plan

Business plans are like road maps: it’s possible to travel without one, but that will only increase the odds of getting lost along the way.

Owners with a business plan see growth 30% faster than those without one, and 71% of the fast-growing companies have business plans . Before we get into the thick of it, let’s define and go over what a business plan actually is.

What is a business plan?

A business plan is a 15-20 page document that outlines how you will achieve your business objectives and includes information about your product, marketing strategies, and finances. You should create one when you’re starting a new business and keep updating it as your business grows.

Rather than putting yourself in a position where you may have to stop and ask for directions or even circle back and start over, small business owners often use business plans to help guide them. That’s because they help them see the bigger picture, plan ahead, make important decisions, and improve the overall likelihood of success. ‍

Why is a business plan important?

A well-written business plan is an important tool because it gives entrepreneurs and small business owners, as well as their employees, the ability to lay out their goals and track their progress as their business begins to grow. Business planning should be the first thing done when starting a new business. Business plans are also important for attracting investors so they can determine if your business is on the right path and worth putting money into.

Business plans typically include detailed information that can help improve your business’s chances of success, like:

  • A market analysis : gathering information about factors and conditions that affect your industry
  • Competitive analysis : evaluating the strengths and weaknesses of your competitors
  • Customer segmentation : divide your customers into different groups based on specific characteristics to improve your marketing
  • Marketing: using your research to advertise your business
  • Logistics and operations plans : planning and executing the most efficient production process
  • Cash flow projection : being prepared for how much money is going into and out of your business
  • An overall path to long-term growth

10 reasons why you need a business plan

I know what you’re thinking: “Do I really need a business plan? It sounds like a lot of work, plus I heard they’re outdated and I like figuring things out as I go...”.

The answer is: yes, you really do need a business plan! As entrepreneur Kevin J. Donaldson said, “Going into business without a business plan is like going on a mountain trek without a map or GPS support—you’ll eventually get lost and starve! Though it may sound tedious and time-consuming, business plans are critical to starting your business and setting yourself up for success.

To outline the importance of business plans and make the process sound less daunting, here are 10 reasons why you need one for your small business.

1. To help you with critical decisions

The primary importance of a business plan is that they help you make better decisions. Entrepreneurship is often an endless exercise in decision making and crisis management. Sitting down and considering all the ramifications of any given decision is a luxury that small businesses can’t always afford. That’s where a business plan comes in.

Building a business plan allows you to determine the answer to some of the most critical business decisions ahead of time.

Creating a robust business plan is a forcing function—you have to sit down and think about major components of your business before you get started, like your marketing strategy and what products you’ll sell. You answer many tough questions before they arise. And thinking deeply about your core strategies can also help you understand how those decisions will impact your broader strategy.

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2. To iron out the kinks

Putting together a business plan requires entrepreneurs to ask themselves a lot of hard questions and take the time to come up with well-researched and insightful answers. Even if the document itself were to disappear as soon as it’s completed, the practice of writing it helps to articulate your vision in realistic terms and better determine if there are any gaps in your strategy.

3. To avoid the big mistakes

Only about half of small businesses are still around to celebrate their fifth birthday . While there are many reasons why small businesses fail, many of the most common are purposefully addressed in business plans.

According to data from CB Insights , some of the most common reasons businesses fail include:

  • No market need : No one wants what you’re selling.
  • Lack of capital : Cash flow issues or businesses simply run out of money.
  • Inadequate team : This underscores the importance of hiring the right people to help you run your business.
  • Stiff competition : It’s tough to generate a steady profit when you have a lot of competitors in your space.
  • Pricing : Some entrepreneurs price their products or services too high or too low—both scenarios can be a recipe for disaster.

The exercise of creating a business plan can help you avoid these major mistakes. Whether it’s cash flow forecasts or a product-market fit analysis , every piece of a business plan can help spot some of those potentially critical mistakes before they arise. For example, don’t be afraid to scrap an idea you really loved if it turns out there’s no market need. Be honest with yourself!

Get a jumpstart on your business plan by creating your own cash flow projection .

4. To prove the viability of the business

Many businesses are created out of passion, and while passion can be a great motivator, it’s not a great proof point.

Planning out exactly how you’re going to turn that vision into a successful business is perhaps the most important step between concept and reality. Business plans can help you confirm that your grand idea makes sound business sense.

A graphic showing you a “Business Plan Outline.” There are four sections on the left side: Executive Summary at the top, Company Description below it, followed by Market Analysis, and lastly Organization and Management. There was four sections on the right side. At the top: “Service or Product Line.” Below that, “Marketing and Sales.” Below that, “Funding Request.” And lastly: “Financial Projections.” At the very bottom below the left and right columns is a section that says “Appendix.

A critical component of your business plan is the market research section. Market research can offer deep insight into your customers, your competitors, and your chosen industry. Not only can it enlighten entrepreneurs who are starting up a new business, but it can also better inform existing businesses on activities like marketing, advertising, and releasing new products or services.

Want to prove there’s a market gap? Here’s how you can get started with market research.

5. To set better objectives and benchmarks

Without a business plan, objectives often become arbitrary, without much rhyme or reason behind them. Having a business plan can help make those benchmarks more intentional and consequential. They can also help keep you accountable to your long-term vision and strategy, and gain insights into how your strategy is (or isn’t) coming together over time.

6. To communicate objectives and benchmarks

Whether you’re managing a team of 100 or a team of two, you can’t always be there to make every decision yourself. Think of the business plan like a substitute teacher, ready to answer questions any time there’s an absence. Let your staff know that when in doubt, they can always consult the business plan to understand the next steps in the event that they can’t get an answer from you directly.

Sharing your business plan with team members also helps ensure that all members are aligned with what you’re doing, why, and share the same understanding of long-term objectives.

7. To provide a guide for service providers

Small businesses typically employ contractors , freelancers, and other professionals to help them with tasks like accounting , marketing, legal assistance, and as consultants. Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, while ensuring everyone is on the same page.

8. To secure financing

Did you know you’re 2.5x more likely to get funded if you have a business plan?If you’re planning on pitching to venture capitalists, borrowing from a bank, or are considering selling your company in the future, you’re likely going to need a business plan. After all, anyone that’s interested in putting money into your company is going to want to know it’s in good hands and that it’s viable in the long run. Business plans are the most effective ways of proving that and are typically a requirement for anyone seeking outside financing.

Learn what you need to get a small business loan.

9. To better understand the broader landscape

No business is an island, and while you might have a strong handle on everything happening under your own roof, it’s equally important to understand the market terrain as well. Writing a business plan can go a long way in helping you better understand your competition and the market you’re operating in more broadly, illuminate consumer trends and preferences, potential disruptions and other insights that aren’t always plainly visible.

10. To reduce risk

Entrepreneurship is a risky business, but that risk becomes significantly more manageable once tested against a well-crafted business plan. Drawing up revenue and expense projections, devising logistics and operational plans, and understanding the market and competitive landscape can all help reduce the risk factor from an inherently precarious way to make a living. Having a business plan allows you to leave less up to chance, make better decisions, and enjoy the clearest possible view of the future of your company.

Understanding the importance of a business plan

Now that you have a solid grasp on the “why” behind business plans, you can confidently move forward with creating your own.

Remember that a business plan will grow and evolve along with your business, so it’s an important part of your whole journey—not just the beginning.

Related Posts

Now that you’ve read up on the purpose of a business plan, check out our guide to help you get started.

what is the importance of a business plan to students

The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.

what is the importance of a business plan to students

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How to Write the Perfect Business Plan

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Created by Henry Steele

By Henry Steele - January 8, 2018

what is the importance of a business plan to students

Are you planning to start a business or do you already own one ?

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If the answer is yes, then you need a business plan .

This seems like an extremely daunting task, but if you understand your business, it won’t be hard at all. It’s simply a matter of organizing the information in a clear, concise manner.

The following article discusses how to write the perfect business plan, including the types of business plans most commonly used, top 10 do’s and don’ts, what goes into a business plan, the structure of your business, marketing and sales, your organizational and operational plan and much more.

What is a Business Plan?

What is a Business Plan

To help you write the perfect business plan, we’ll provide you with an exact outline of everything you’ll need to include, so even if you think you’re too young, you’ll have no problem starting out.

The reason many business owners first decide to put together a business plan is that they simply have to. If you want to apply for a business loan, attract investors, or obtain any necessary licensing, business plans are a prerequisite.

Even if you don’t need financing or licensing, however, it’s still a good idea to have a well-thought-out business plan. If you need to hire any key employees, a strong business plan will help attract strong talent. Whenever you need to deal with professionals, such as a consultant or an accountant, your business plan gives them invaluable insight.

Finally, it’s a good idea to put a business plan together for your own sake . As you put the business plan together, you’ll have the chance to really conceptualize and evaluate your strategy. You’ll build proof that your idea makes both financial and logistic sense. Once you start working to get your business off of the ground, a strong business plan guides and helps you stay on-track.

Types of Business Plans

Business plans come in all shapes and sizes, but you can generally whittle them down to three key versions.

Shortened Business Plan

This is an easily digestible, much shorter version of your normal business plan. Typically, it will be between three and five pages. You should include your executive summary, financials, and any information pertinent to the person/s to whom you are presenting the plan. A shortened business plan is usually made with a specific purpose or recipient in mind, so it will be easy to figure out exactly what is and isn’t important enough to make the cut.

In-depth Business Plan

Your standard business plan, and the one we will be teaching you to write . Again, these come in handy when seeking to fund your business, attract employees or work with professionals, or simply to act as a guide.

Operational Business Plan

Unlike the other two business plans we have discussed, an operational business plan is meant for internal use only. This will not be distributed to anybody except for employees or professionals working on your company’s behalf. An operational business plan focuses on the company’s overarching goals, mission, and vision so that all department stay aligned. Your Marketing and Sales, Operational Plan, and Financial sections will be key here.

What Language Should I Use?

What Language Should I Use

Top 10 Do’s and Don’ts

Before we dive into our business plan outline and describe each section, let’s go over some general do’s and don’ts you’ll want to keep in mind as you write your business plan:

Do: Provide Examples

Do Provide Examples

Don’t: Overload the Reader

An in-depth business plan will contain lots of useful information and will likely end up being much more than ten pages. Because it’s so long by nature, you need to make sure to only include the most useful information in each section. Format everything carefully and correctly. Don’t use language that confuses or intimidates readers outside of your industry. The easier it is for the reader to absorb everything you’re presenting them, the more effective your business plan is.

Do: Proper Research

Do Proper Research

Don’t: Leave Any Stone Uncovered

Somebody who reads your business plan shouldn’t have any major questions left unanswered. Include complete information about what you are aiming to do, how you are going to do it, how much money is needed, etc. Use our full outline below to ensure everything is covered.

Do: Be Honest

Do Be Honest

Don’t: Hustle Just to ‘Get it Done’

Writing a business plan isn’t a task you’re completing and checking off your to-do list. Everything must be accurate, thoughtful, and well-articulated. Keep in mind: this will guide you as you operate your business and is the key to obtaining financing and/or pitching your business.

Do: Make it a Living Document

Do Make It a Living Document

Don’t: Focus Solely on Your Product

You might think your business revolves around your particular product/s or service/s, but there’s so much more to it than that. Your business plan talks about how the actual business is run, so you might want to leave the technical specifications and granular details for another time.

Do: Show Your Passion

In the end, your business plan and your business are about you. While it’s important to maintain a professional tone, don’t be afraid to let your enthusiasm about your business seep through every page.

Don’t: Write Alone

Do Show Your Passion

How to Write a Business Plan

How to Write a Business Plan

  • Keep it concise.
  • Know your audience.
  • Perfect your executive summary.
  • Focus and refine constantly.
  • Gather and check all of your data.
  • Be confident, but don’t go overboard.
  • Be as clear and in-depth as possible.
  • Enhance with graphics.
  • Share and gather feedback from trusted advisors.

What Goes into a Business Plan?

When writing your business plan, you will need to put in a lot of time and research. Luckily, we’re here to walk you through all of that. A winning business plan contains the below sections, and you can use our sidebar to navigate to each of these:

  • Introduction

Executive Summary

  • Information About Your Business
  • Industry Analysis

Marketing and Sales

  • Operational Plan

Your Business Plan Introduction

Introduction

Cover Letter

A cover letter is essential whenever you are presenting the business plan to somebody for a specific reason and should be tailored to each individual. Like any other letter, it should include names, dates, and a cordial greeting. In the first paragraph, explain exactly why you are presenting the business plan to the recipient. Take one or two paragraphs to discuss your business (an even more condensed executive summary, as we will cover in the next section). Finally, let the reader know you appreciate their consideration and would be happy to address any questions or concerns. Include any necessary contact information below your name and signature.

Your title page should be clean and simple. Here’s what to include in it:

  • The title of the document (i.e. Business Plan, Business Proposal, Summary Business Plan).
  • The name of your company.
  • A sub-heading, if necessary (i.e. ‘Presented to ABC Investing Company’).
  • Who the business plan was prepared by.
  • The name of any other owners or key partners.
  • Basic contact information.

Table of Contents

A table of contents is essential to make your business plan transparent and easy to navigate. It is unlikely that a serious potential partner or investor will read through your plan once and toss it aside, so you want to make it easy for them to return and pick up where they left off or revisit any key bits of information. If you are providing a digital copy, include clickable links to each section for the reader’s benefit.

Executive Summary

The executive summary is exactly what it sounds like – a brief summary that describes the essence of what your business is and what it aims to do. Here’s how to write a winning executive summary:

  • Begin with a single sentence that sums your business up. This is otherwise known as your value proposition.
  • Describe what niche or problem your business fills or solves.
  • Explain exactly how your business solves this problem in a way that the rest of the competition does not or cannot.
  • A very brief (one or two sentences) summary of any other information from the following sections that would be critical to your business’ success.

Your Business / Company

Information About Your Business

Structure of Your Business

First and foremost, you’ll need to discuss the legal structure of your business:

  • Sole-proprietorship: simple to set-up, but the owner is fully liable for any debts or obligations.
  • Partnership: a general partnership is also simple to set-up, but all partners would be liable. Limited partnerships, or LPs, are a bit more complicated.
  • Corporation: a corporation is owned by stockholders, so it is unlikely you will either want or need to structure as one. There are two types of corporations, which vary in terms of shareholder limitations and tax liabilities: S corporations and C corporations.
  • Limited liability corporation (LLC): an LLC is generally the best of both worlds for small businesses. The owner’s’ liability is limited, and taxation is that of a partnership, which provides better flexibility over a corporation.

Once the legal structure is determined, you’ll need to break down the ownership of the business. Are you the sole owner? Do you have business partners? Has anybody purchased a share of the business in exchange for funding? Provide a brief introduction to any key executives or owners, outlining what strengths they have and how they will impact the business.

Finally, include a brief history (if any) of your business, and any pertinent location details.

Business Vision, Mission, and Values

This is one of the most important sections of your business plan. Here, you need to impart your passion for the business and really describe what you’re trying to achieve.

Business Vision

Your vision statement is all about the company’s goals. It serves as a template for exactly what you’re trying to achieve, both short-term and long-term. Don’t hold back when it comes to your vision: if your goal is to eventually dominate the Northeastern coffee shop scene, say that. A vision statement is your chance to think big.

Where a vision statement thinks big, a mission statement is more practical. Your mission statement should discuss your company’s purpose. Why does it even exist in the first place? This mission statement will act to provide organizational direction and help you achieve your vision.

The values are all about how you plan to operate your business in relation to the stakeholders. This includes investors, customers, and members of the local community. How do you plan to treat them? What are you doing to make their lives and the world they live in better?

Analyzing the Industry

Analyzing the Industry

Market Size

Here, you’ll describe exactly how large the market is. You should be able to find national figures with relatively little research. If you’re not serving a national or international market, discuss how large the population you plan to serve is. Extrapolating from the national information, how big do you expect your actual market size to be?

In addition, you should discuss any important trends. Is your market growing or retracting? If your market is growing, discuss how you project to fit into that growth and seize your market share. If your market is shrinking, discuss why you think entering the marketplace is worthwhile, and whether or not you project growth in the future.

Industry Focus and Trends

Industry Analysis

First, you’ll want to talk about the industry in general. This includes looping back to the market size and discussing whether it is growing, stagnant, or shrinking. Are there any overarching trends or cycles that will affect your business?

This is also a good opportunity to discuss pricing. What type of money does your average customer spend in your industry? What price point are you aiming for, and why is that a good strategy? If you aren’t competing on price, what reasons do you have to believe that somebody will be willing to spend more on your business?

Below, we will discuss two valuable business models you can and should use to discuss your industry further.

PEST Analysis

PEST Analysis

  • Political: what impact could the government have on your business. Is there any pending legislation that could change how you operate? Would tax changes or tariffs cause a financial strain?
  • Economic: would an economic downturn cause sales to tumble, or is your business relatively immune to economic factors? Furthermore, what do current economic trends (inflation, consumer demand, etc.) say about your short-term potential?
  • Social: are there any relevant social or cultural trends that are shaping the industry? Is there a distinct seasonality to your business? Consider, for example, the impact of the Christmas season to retailers in the United States.
  • Technological: how has technology shaped your industry over the past decade? Take a look at the future and make an educated guess on where the industry is headed, and how you’ll fit into that future.

Sometimes PEST is lengthened to PESTLE to include any legal or environmental factors as well. If you believe either will have a significant impact on your business, make sure to include it as well.

Porter’s 5 Forces Analysis

Porter 5 Forces

  • Competition: we will go into this in more detail next, but for this model you should discuss how much competition there is, and how profitable they might be.
  • Threat of new entrants: how easy is it for somebody to enter your industry? For a casino, it would be quite difficult (extensive significant licensing and upfront costs), but for a food truck, it would be quite minimal. The easier it is to enter your industry, the greater the threat is of somebody else entering and stealing your market share.
  • Power of suppliers : if your industry has a low number of suppliers or suppliers that are dominated by much larger companies, you will have a problem sourcing on-budget and on-time. If you aren’t reliant on very specific suppliers, however, or if there is competition among suppliers, you can find yourself in an advantageous position.
  • Power of customers: specifically, do your customers have the ability to drive prices down? If you expect to have a large number of small customers, your price will remain relatively stable. However, if you plan on having a small number of very important customers, they maintain the power to dramatically impact your pricing and profitability.
  • Threat of substitutes: how likely is it that somebody will forego your offering for a comparable substitute. If you’re a restaurant, for example, Amazon’s grocery delivery business would be a substitute, since people may decide to stay home and cook for themselves.

Competition

It’s just as important to discuss how your competition is navigating the industry you plan on dominating. With a strong idea of where your competition is positioned and the strategic decisions they are making you will be able to determine where your own business fits in.

To begin, discuss what your competition looks like. Are there many small businesses vying for the same customers or are you competing against a couple of whales? List your most important competitors and summarize them. Discuss their location, products, pricing, market share, and any important strategic decisions they have made. Use this information to create a list of their strengths and weaknesses.

After discussing the competition, it’s time to think about where you fit among them. SWOT Analysis is the perfect model to do just that.

SWOT Analysis

SWOT Analysis

Here is what a complete SWOT Analysis looks like:

  • Strengths:  Exactly as it sounds. What do you do best? What do you do that the competition absolutely cannot?
  • Weaknesses:  Be honest. Are there any resources you lack? Any skillsets that are missing? What isn’t as efficient as it could be?
  • Opportunities:  Improving any of your weaknesses is a major opportunity. In addition to that, consider internal or external factors that might change and present a new business opportunity. Finally, are there any complementary products or services that you could consider offering to your customers?
  • Threats:  What potential is there for your business to be damaged? Are there any industry or economic trends? Could your competition change strategies and harm you? Do any obstacles to success stand in your way?

Once you have completed the SWOT analysis, wrap this section up by talking about your own competitive strategy. Given your industry, the competition, and your own SWOT analysis, what decisions are you making to position the company to succeed?

Readers of your business plan definitely need to know how you’ll be marketing and selling your product or service.There are going to be three key elements of your marketing plan.

Customer Segmentation

Customer Segmentation

  • Demographic information – age, gender.
  • Psychographic profile – what do they care about? What motivates them? What do they value? Where do they get their information?
  • Socioeconomic profile – income, lifestyle preference.

Describe your target audience in great detail. The more you know about your customer, the easier it will be to market to them.

Advertising and Promotion Plan

After building a strong customer profile of your target audience, you should know what your customer cares about. Think about how your business fits into that, and strategize how you’re going to market to them. Use their demographic and behavioral information to determine the most appropriate channels to focus on.

Branding

Your brand should seep into all aspects of your business – the website, advertisements, and even the tone of communications with customers. Whatever strategies you have for these elements, make sure to lay them out.

Finally, include your company logo and slogan, if they already exist. If not, you should begin to think about them and use the rest of this section as a guide.

Sales Distribution Plan

How exactly do you plan on getting your goods or services into somebody’s hands? Do you plan on hiring a sales staff or will you handle it all yourself initially? Do you plan on doing inbound or outbound sales? What does the sales process look at each step of the marketing funnel?

You’ll also need to think about and discuss pricing. Discuss your pricing strategy and why it’s a good value for your customers. If you are going low or moderately priced, discuss how you can stay profitable and remain differentiated from the competition. If you are a luxury brand, discuss why somebody will be willing to pay more for your business than the competition.

Lastly, consider distribution. Are you going to allow customers to purchase directly from you? Will they have to go through distributors? Do you have any retail partnerships to leverage? These are important decisions that have a profound impact on a business.

Organizational and Operational Plan

Operational Plan

Production Process

Production Process

Here are some ideas of what you’ll need to outline:

  • Raw materials – how much do they cost? Do prices fluctuate? Is supply limited in quantity or how quickly it can be obtained in a pinch?
  • What machines, technologies, etc., do you use for production? What costs are involved in these? Are you renting or do you own them?
  • What is your estimated daily output?
  • How easy is it to scale up or down as necessary? How does this impact the cost per unit?
  • Which methods of quality control do you employ, both pre- and post-production?

Supply Chain Management

If you’re a service business, you might not have any physical inventory, but your employees should be considered as your supply. After all, without them, you won’t be able to provide your services to your customers. What strategies do you have to recruit and retain the best talent possible? Can you scale quickly through recruiting and training, overtime, or an increase in part-time help?

You should also look back at your sales distribution plan and consider the logistics of shipping any physical products. How often will orders be fulfilled? Do you have the ability to rush orders if necessary? How will returns or incorrect shipments be handled in a way that keeps everybody happy?

Financials

Here are the components you must include in your business plan’s financial information:

Forecasted Sales

Use all of the marketing data you’ve put together to determine what a reasonable sales forecast looks like. Project your sales for a period of two or three years, going one month at a time. Include seasonality whenever applicable. As you forecast sales, include exactly how much revenue you expect to earn from those sales, and the total direct cost of those sales. You’ll be able to use these figures to determine revenue and gross margin, which you should use to compare to industry and competitive standards.

Projected Expenses

Forecasted Sales

Fixed costs are going to stay the same whether you sell one widget or twenty. For example, rent, electricity, insurance, marketing costs, and payroll (with the exception of commission and bonuses), will mostly stay the same no matter what sales look like.

Variable costs, on the other hand, will vary by each unit sold. This includes the cost of materials, shipping, coupons, taxes, etc. Most of this should already be covered in your forecasted sales report, but make sure that nothing is overlooked.

Make sure to consider that as you scale, some fixed costs may become variable. As sales increase, you may have to hire more employees, or move into a bigger office. Keep this in mind by always referring back to your forecasted sales and estimating your business needs as best you can.

Balance Sheet

Everything comes together on your balance sheet. This includes your projected sales and expenses, but also deals with assets and liabilities.For example, if you take out a loan, you’ll need to include the capital in your assets and the repayments, including interest, in your liabilities. Non-monetary assets, such as the property and machinery must also be included.

You can find a sample balance sheet here .

Cash Flow Statement

Cash Flow Statememt

Month by month, you’ll track exactly how much cash you expect to leave your hands and how much will come in. Keep in mind that not all sales are paid fully right away. Consider how many sales will be paid in full at the time of sale, how many will be paid in 30 days, 60 days, or go completely delinquent.

Once you have your cash flow statement completed, run some quick analysis. Compare your projected expenses each month to the projected cash coming in each month. For any months that project to have a negative cash flow, ensure you have enough money on hand to cover the difference.

You may find two examples of completed cash flow statements here and here .

Customer Lifetime Value

Customer Lifetime Value is an estimate of exactly how much each customer you acquire will be worth total. A simple way to calculate this is by determining how many purchases a customer makes before churning, and multiplying it by the average amount of their purchase. In other words, how many purchases will they make before moving on from your business, and how much will those purchases be worth?

Let’s take a look at a real-world example. Let’s assume you’re running an oil change business, and you know your average customer gets three oil changes per year. With premium options and add-ons, your average sale is $38.50. Each customer spends an average of three years with you before churning (perhaps they have moved away or found another service they prefer).

In this example, your expected CLV would be $346.50. You know each average customer will make 3 purchases per year, for 3 years, at $38.50 each. 3 x 3 x $38.50 = $346.50, which is your CLV.

Why is CLV so important? Let’s take a look at unit economics.

Unit Economics

Unit Economics

The formula for cost of acquisition is simple. Divide your total marketing spend by the number of customers you have acquired through all marketing channels. If you spend $25,000 across all marketing channels and acquire 1,000 customers, your average cost per acquisition is $25.00.

Tracking your marketing expenses isn’t the tricky part. Attributing each user to a specific campaign, however, can be. If somebody walks into your store after seeing a TV ad, for example, it can be hard to properly attribute them. Digital campaigns are a bit easier, as there are typically tracking links that make everything easy to calculate. You’ll have to do your due diligence and make your best-educated guesses here, using industry standards whenever necessary and possible.

You should also take the time to break out your unit economics into each marketing channel. This allows you to track which channels are performing well and which ones aren’t. If Facebook is attracting lots of customers but you’re spending so much that your cost of acquisition is higher than expected CLV, you might actually need to stop spending money there.

It’s important to be very clear about exactly how your business has been funded so far. This includes what you have received through investments, series rounds, or personal loans. You will also need to mention any personal funds that you have put into the business, and how much you have saved that you are willing to put into it in the future.

Once you have discussed the funding your business has received, it is appropriate to lay out exactly how much you’ll need. Make sure to also discuss exactly what any loans or investments will be used for and how that spending will be tracked.

Business Plan Resources

Business plan samples.

To reinforce everything we’ve discussed above, let’s take a look at some sample business plans that have already been put together for your review. We’ll discuss some key takeaways from each plan, helping you consider how your business is unique and what you’ll need to emphasize.

Coffee Shop Business Plan

A coffee shop is a nice, simple business to start our samples with. A coffee shop requires a small storefront, and the location is critical. Most people will gladly stop in for a nice cup of coffee but are unlikely to drive miles out of their way for one. Notice that because of this, the sales forecast is relatively stagnant, even after several years.

Click here for the sample business plan.

Restaurant Business Plan

A restaurant business plan will be similar to a coffee shop, but is a little more involved. Start-up costs are higher as it requires a larger storefront and a larger variety of equipment. Variable costs are higher as a quality meal costs much more than a cup of coffee. The sales forecast shows more growth, as people are more willing to travel for a good meal than they are a simple cup of coffee.

Food Truck Business Plan

Let’s consider a third food-based business to really drive home how businesses that appear similar will have important differences. Food trucks have a much different fixed cost structure than a coffee shop or restaurant, as they don’t have a physical location. Seasonality and location will have a huge impact on salespeople won’t want to stand outside for a burrito when it’s cold and snowy outside. With a much smaller staff, a food truck is also more likely to be open for lunch only, or closed a couple days per week.

Startup Business Plan

It’s good to take a look at a general startup business plan to get an idea of how to estimate costs, sales, etc. This sample plan is a take-out pizza joint. Notice that trends are important, as the business plan notes their market is a growing area and they are aiming to fill a niche for low to middle-income families, which comprise the majority of residents in their service area. They use a mixture of studies and geographic data to make conservative estimates, giving potential investors confidence that the business can be profitable if the strategies are successfully executed.

Photography Business Plan

A photography business is a great example of a company that is minimal to the extreme. Mostly, you will be relying on your own skills and experience. Minus initial equipment and the cost of your own time, expenses are minimal. Still, you see that it’s important to have a strong plan in place so that you understand how to position your services and who exactly you’re aiming to serve.

Business Plan Tools

Here are a variety of tools that make both writing a business plan and getting your business off the ground much easier:

If you want to quickly build your idea into a business plan to validate its value or just to get started, LivePlan is perfect. The business planning process is made simple, as you simply need to answer questions and are given plenty of examples, videos, and tutorials along the way. You can even use LivePlan to collaborate with partners or investors, testing ideas on the fly and seeing its impact on your business’ health.

Click here to take a look at LivePlan.

Rocket Lawyer

When you’re starting a business, it’s extremely likely you’ll need quick legal help. You might need advice on licensing, permits, or zoning. Or perhaps you want to discuss how to structure your business as an LLC. Rocket Lawyer can help. You’ll have access to their services for a monthly fee that’s less than a cup of coffee each day. There’s an even option to help incorporate your business by filling out a couple of quick forms.

Click here to take a look at Rocket Lawyer.

Like LivePlan, StratPad offers a cloud-based chance to build your business plan and strategy on the fly. StratPad offers a demo for their services and if you’re looking for funding will even match you up automatically with a financial institution that makes sense for your business. Our suggestion is to take a look at both LivePlan and StratPad and select the one that you like best.

Click here to take a look at StratPad.

If you’re looking for a simple way to create a professional business plan without all the bells and whistles, BizPlan is perfect for you. You’ll be able to create a stylish, professional business plan using intuitive drag-and-drop templates. Financials are easy to create using a user-friendly dashboard.

Click here to take a look at BizPlan.

A typo can derail your business plan and make you look sloppy and unprepared, no matter how much effort you put into it. Grammarly is a world-class spell checker that also checks for many of the most common grammatical error for free. There’s even a browser-based version that you can use no matter where you are. For a fee, you can subscribe to Grammarly Premium, which provides an even more granular check.

Click here to take a look at Grammarly.

Business Plan Templates

Now that we have an idea of everything you need to include in your business plan and which tools you’ll need to get started, it’s time to get started. Here are some websites with sample business plan templates you may use to make writing the perfect business plan a bit easier:

  • Score.org has a variety of business plan and financial statement templates, including ones for both start-ups and established businesses.
  • Microsoft Office’s website has many valuable business plan templates, including a checklist and PowerPoint Presentation templates for pitching your business plan.
  • The S. Small Business Administration allows you to create a business plan with a free account that you can download and distribute as a PDF.
  • Santa Clara University provides a 15-section business plan that can be downloaded one section at a time or all at once.
  • Law Depot offers a business plan template tailored for you. Simply answer some quick questions and your template is instantly ready to download.

How to Write a Business Plan Conclusion

In the end, a business plan is a highly unique and personalized document. A business plan that is right for your business won’t be right for any other business in the world. By closely following the outline and strategies above, however, you’ll have a great base to begin crafting your own perfect business plan.

Bibliography:

  • Berry, T. 15 Reasons You Need a Business Plan. Entrepreneur. Retrieved from https://www.entrepreneur.com/article/83818.
  • CBM Group. What Is The Right Tone And Writing Style For A Business Plan? Retrieved from http://www.cbmgroup.co.uk/blog/business-plan-writing/what-is-the-right-tone-and-writing-style-for-a-business-plan.
  • Discover Business. How to Write a Business Plan. Retrieved from https://www.discoverbusiness.us/business-plans/.
  • Fontinelle, A.How To Write A Business Plan. Investopedia. Retrieved from http://www.investopedia.com/university/business-plan/.
  • Franklin, B. The Three General Types of Business Plans. Business Power Tools. Retrieved from http://www.businesspowertools.com/2016/06/management-2/the-three-general-types-of-business-plans/.
  • Gregory, A. Comprehensive Business Plan Outline for Small Business. The Balance. Retrieved from https://www.thebalance.com/a-comprehensive-business-plan-outline-for-small-business-2951557.
  • Gregory, A. How to Conduct a SWOT Analysis for Your Small Business. The Balance. Retrieved from https://www.thebalance.com/swot-analysis-for-small-business-2951706.
  • Hazlett, M. Basics of Unit Economics. Medium. Retrieved from https://medium.com/@markhazlett/basic-of-unit-economics-79f1d6cae085.
  • Investopedia. Porter’s 5 Forces. Retrieved from http://www.investopedia.com/terms/p/porter.asp.
  • Johnson, J. How to Write a Cover Letter for a Business Plan. Small Business Chronicle. Retrieved from http://smallbusiness.chron.com/write-cover-letter-business-plan-43209.html.
  • Katz, A. Determining the Best Legal Structure for Your Business. Entrepreneur. Retrieved from https://www.entrepreneur.com/article/236450.
  • Kolowich, A. How to Write a Business Plan: A Bookmarkable Guide (With Examples). HubSpot. Retrieved from https://blog.hubspot.com/marketing/how-to-write-a-business-plan.
  • Lavinsky, D. Marketing Plan Template: Exactly What To Include. Forbes. Retrieved from https://www.forbes.com/sites/davelavinsky/2013/09/30/marketing-plan-template-exactly-what-to-include/#1ddaeeb43503.
  • My Own Business Institute. Session 2: The Business Plan. Retrieved from https://www.scu.edu/mobi/business-courses/starting-a-business/session-2-the-business-plan/.
  • Parsons, N. How to Write a Business Plan [Updated for 2017]. Bplans. Retrieved from http://articles.bplans.com/how-to-write-a-business-plan/.
  • PESTLE Analysis. What is PESTLE Analysis? A Tool for Business Analysis. Retrieved from http://pestleanalysis.com/what-is-pestle-analysis/,
  • Robbins, S. Why You Must Have a Business Plan. Entrepreneur. Retrieved from https://www.entrepreneur.com/article/74194.
  • Ronick, D. 10 Business Plan Dos and Don’ts. Inc. Retrieved from https://www.inc.com/articles/201104/business-plan-dos-and-donts.html.
  • Ronick, D. 10 Things A Business Pitch Absolutely Does (And Does Not) Need. Business Insider. Retrieved from http://www.businessinsider.com/10-survival-tactics-for-a-successful-business-plan-pitch-2011-4/.
  • Shopify. The Ultimate Guide to Business Plans, Chapter 3: The Company. Retrieved from https://www.shopify.com/guides/businessplan/the-company.
  • Wasserman, E. How to Write the Financial Section of a Business Plan. Inc. Retrieved from https://www.inc.com/guides/business-plan-financial-section.html

what is the importance of a business plan to students

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Business Plan Examples for Students

Ajay Jagtap

  • December 29, 2023

26 Min Read

business plan example for students

Do you know what’s the most common mistake students and rookie entrepreneurs make while preparing their first business plan?

Of course, it’s the first business plan we’re talking about; there’ll definitely be a few. However, overcomplicating things and failing to consider a business plan example still remains the most common one.

That’s why we decided to come up with a solution. We’ve curated this list of top business plan examples for students to help you get going.

So whether you need a business plan for a college project, start a side hustle, or win a business competition, these examples are just what you need to create business plans that stand out.

Ready to dive in? Let’s start by understanding the key elements of a business plan example:

Key Elements of a Business Plan Example

Business planning is not as complicated of a process as people think it is; they’re just overcomplicating things. (Don’t think so?)

Let’s simplify the key elements that make up a comprehensive business plan; you’ll understand it better that way.

Executive Summary:

Company overview:, market analysis:, products and services:, sales and marketing strategies:, operations plan:, management team:, financial plan:.

That’s pretty much it about the key elements of a business plan example. Next, let’s explore the best business plan examples for students.

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what is the importance of a business plan to students

Top Business Plan Examples for Students

Now that you already know about the components of a business plan template, let’s review some of the best business plan examples for students.

1. Startup Business Plan Example

Upmetrics’ startup business plan example is the ideal solution for students planning to start up or participate in a business plan competition. This business plan template follows the SBA-approved business planning format used by thousands of successful entrepreneurs.

Whether your startup is about a new-age AI-based application, an online shopping site, or traditional IT consulting—this sample business plan is just what you need.

Unlike any traditional small business plan, this example of a startup business plan is lean and agile in approach, focuses on innovation, and emphasizes market validation.

startup business template

2. Lean Business Plan Example

Since you’re transitioning from a student to an entrepreneur, you may not have enough time to spend on creating a detailed business plan. That’s where this lean business plan template can help.

It’s a condensed version of a traditional plan summarizing all its sections with a primary focus on covering only the critical aspects of the business.

This template is best for startups or businesses uncertain about business planning and student-turned-entrepreneurs with limited time and resources to prepare a business plan.

the lean canvas template

3. SBA Business Plan Example

Following an SBA-recommended business plan format is key to securing bank loans and business grants. Since it can be time-consuming to find a template that follows a similar outline as the SBA, this SBA-approved business plan example is the way to get started.

This SBA business plan template has nine primary sections, that include executive summary, company description, market analysis, organization, product description, marketing, funding request, and financial projections.

SBA business plan examples ensure you stay on track and don’t deviate from your funding needs.

4. One-Page Business Plan Example

As you may have already guessed, a one-page business plan is a one-page version of a traditional business plan. Since it’s a condensed version of a business plan, drafting it can be quite easy and quick compared to a lean or traditional plan.

Employees, partners, and vendors often use one-page business plans as a quick overview of your company and banks and investors as a summary of your operations.

While it may not be the ideal choice for entrepreneurs seeking investment or bank loans, students with side hustles and idea-stage startups can consider this option.

one page business template

5. HBS Sample Business Plan

Harvard Business School’s new venture competition selected this sample business plan as a finalist in 2011.

This is a business plan of App Success, a collaborative web-based platform that connects low-income high school seniors with college students from top universities; this business will enable them to collaborate on college selection, college applications, and financial aid applications.

This example can be a great reference for those planning to start a mobile or web-based solution.

hbs sample business plan

6. Kean University Sample Business Plan

Kean University organizes a business plan competition every year for its students where students prepare and present business plans to compete, and this is one of the sample business plans the University provides to participants to understand the format.

It’s a business plan of Blue Water Boatworks, Inc., a boat detailing and cleaning company specializing in servicing recreational fiberglass and aluminum watercraft.

This example can be a great reference for those planning to start a business related to housekeeping, cleaning, or maintenance.

kean university sample business plan

7. UVM Sample Business Plan

If you are looking for a strategic business plan for a food business, the University of Vermont’s Fancy Foods Business Plan can be a guiding resource for you.

Despite the fact that it can be a good reference for detailed planning, it was written in 1998, so any statistics and numbers may not seem relevant to today’s market landscape. Make sure you keep that in mind.

You may closely follow this example as a reference if planning to start a food truck, restaurant, or any other business that serves food.

uvm sample business plan

That was the list of best sample business plans for students. However, there’s more to talk about. You now have a business plan example, but what about pitching to investors? Let’s explore free pitch deck examples for students.

Free Pitch Deck Example for Students

Pitching to investors as a first-time founder can be exciting but also overwhelming at times. Worry not; we’ve got a solution—investor pitch templates. We’ve prepared a set of 8 investor pitch templates and examples for students and entrepreneurs to help create winning business pitches.

Whether you need a pitch to find an opportunity, ask for subject matter knowledge, or a problem-solving pitch, these investor pitch examples have got you covered. Download now.

How to write a winning plan for a business plan competition?

Creating a business plan is no different than creating one for a real business. Similar to how entrepreneurs prepare and present business plans to investors, Students in business plan competitions pitch to judges.

In short, the business planning process remains exactly the same. Let’s discuss how you can write a winning plan to help you win a business plan competition.

  • Select a compelling business idea : everything starts with a compelling idea. Make sure you have a viable business idea to compete in the competition.
  • Refer to winning business plan examples : Once you are sure about your business concept, refer to business plan examples from previous winners and how they planned the sections of their plan.
  • Market Research & Industry Analysis : After referring to business plan examples, conduct industry research and market analysis to make your statistical and financial numbers accurate and realistic.
  • Understand business model and revenue streams : Since you are preparing a business plan for a company that doesn’t exist, be sure about the business model and how the business will generate profit.
  • Use AI business plan generator : Using an AI business plan generator like Upmetrics can be incredibly helpful in speeding up the business planning process. With industry-specific business plan templates and AI assistance to write your plan, you can write the first draft of your plan in literally no time.
  • Presentation and visuals : Prepare visuals and graphs to make your business plan visually appealing and numbers digestible. You may not need to prepare these visuals if you use business plan software manually.
  • Proofread and edit : Grammatical errors are the last thing judges want to see in a business plan. Make sure you proofread and edit your draft thoroughly before submitting it.

Easy as that, that’s the way to write a perfect business plan that can lead you to victory in any business plan competition on planet Earth. Let’s have a look at a real-life business and financial plan example.

ai business plan software for students CTA

Business and Financial Plan Example for Students

Having learned about business planning for students, let’s quickly discuss a coffee shop sample business plan and financial statements prepared using Upmetrics.

1. Executive Summary

The Cooper’s Cup will be a new cafe in Phoenix, Arizona. The 1,500 square foot café will be located in the newly constructed Market Square Plaza on the northeast corner of 135th Street and Mission Street. The anchor tenant, the Price Chopper grocery store, has already taken occupancy, and the excellent location brings more than 10,000 shoppers weekly.

The Cooper’s Cup, aptly named for the aromatic brown liquid that will fill the cup, fills the void of original cafes in the market and stands out from its corporate peers with its fast food concepts and prompt services. The Cooper’s Cup is the alternative to fast food/commercial/coffee shops and offers a much calmer, civilized gourmet coffee experience.

There are no televisions in the cafe, the background music is subtle, and work from local artists will hang on the walls. The restaurant is well-appointed, with overstuffed leather chairs and sofas in a library-like setting. The cafe is reminiscent of times gone by – yet is cutting edge technologically with WIFI and state-of-the-art espresso machines.

The Cooper’s Cup measures its financial success in terms of increased market share and earnings. This is a tremendous opportunity with a total local market of $54 million! The keys to success will be offering quality gourmet coffees, taking advantage of its small size, and relying on an outstanding barista staff.

To achieve these goals, the cafe will present some of the area’s finest gourmet beans from local distributors. Because of its small size, the restaurant can enjoy larger margins through lower overhead. The cafe will hand-select baristas and offer salaries comparable to the chains. The baristas will be trained to cross-sell and sell higher-margin products.

The primary objectives of the business plan for Cooper’s Cup are below:

  • To increase revenues by $36,000 or 5% in Year 2 and $73,000 or 10% by Year 3
  • Achieve a profit margin of 5.2% in Year 2 and 6.90% by Year 3
  • Be the Cafe of Choice in the Phoenix area and the recipient of the Best Coffeehouse Award.

Guiding Principles

The Cooper’s Cup is committed to values such as excellence, passion, quality, integrity, and leadership, allowing them to navigate challenges and provide for future opportunities. These core beliefs start with their commitment to their products and their employees. Cooper’s Cup rewards excellence and cherishes loyalty. The cafe will work with its employees to build strong businesses and a secure future.

Mission statement

The Cooper’s Cup is committed to its products and employees, which they believe is the recipe for market success.

Key to success

The Cooper’s Cup stands out from the competition. Below are their Keys to Success:

  • Great Products : providing exemplary products at market prices – will make customers want to return again and again.
  • Hire Quality Baristas : Pay employees rates similar to the larger chains with opportunities for long-term careers and opportunities for advancement with long-term plans to open a second facility.
  • Convert Customers to Connoisseurs : Only 40% of the nation’s coffee drinkers consume premium ground and whole bean coffee – this will aid in the continued growth.

Financial Summary

financial summary

2. Business Overview

The Cooper’s Cup will be a coffee house/cafe located in Phoenix, Arizona. The cozy cafe will be located in the newly completed Market Square Plaza in the Arizona City area. The cafe will serve gourmet coffee, espresso, drip coffee, lattes, and smoothies. The simple pastry offerings may vary with seasonality, but the primary line will be muffins, bread, cookies, scones, and rolls. All pastries will be supplied daily by a local bakery.

The cafe will be owned and operated by Owen Jones, a veteran restaurateur with several years of experience running and managing chain restaurants. The cafe will be open for business Monday – Thursday 7-10, Fridays and Saturdays, 7-11, and closed Sundays.

ownership

The Cooper’s Cup will be formed as an S-Corporation owned by Mr. Doe.

Start-Up Summary

The Cooper’s Cup will have seating for 40 patrons. The rent is $2,075 a month, with a three-five-year lease available. The site comprises 1500 square feet of leased space consisting of a dining room, a coffee bar, two restrooms, and a storage room in the back.

This storefront needs to be plumbed and wired appropriately to be used as a restaurant. Painting, new floors, and countertops are also needed. A custom coffee bar needs to be built. With materials bought on sale and volunteer labor, the cost to renovate will be $71,725.

The coffeehouse equipment will consist of two commercial espresso machines, air pots and urns, a commercial blender, a commercial brewer, top-loading coffee bins, barista syrups, cold drink dispenser, frothing equipment, a commercial refrigerator, microwave, and stainless steel prep bar.

The cost of the equipment is $38,275. The furniture will consist of leather couches and chairs (purchased at auction), coffee tables, bookcases, and window treatments. The artwork will come from local artists and be sold on a consignment basis. The books were secured via donations. The total cost to furnish is $14,000. Other startup expenses will be dishes, furniture, rent deposit, and marketing.

Location and Facilities

location and facilities

The new coffeehouse is located in the highly desirable Phoenix, Arizona, area at the northeastern intersection of 135th Street and Mission Street in the Newmarket Square Plaza. The property is situated in an excellent location, with an easy 6-minute drive time to I-435 and 69 Highway. 

The property is 95% leased with Price Chopper as the Anchor Tenant. Other tenants include LifeSpring Med Spa, Jane’s Canines (Pet Store & Boarding), Pride Cleaners Kahn Dental, and Swim U. 

Price Chopper brings more than 10,000 shoppers per week to the center. The location comprises a population of 9,420 within a one-mile radius, 61,102 within a 2-mile radius, and 149,550 within a 5-mile radius – with a median household income of $120,856. Sprint / Nextel’s corporate office is within 2 miles of the site.

map

3. Market Analysis

Phoenix, Arizona, is an award-winning place to live and work and is considered the leading business community in the Midwest. National publications and organizations recognize Phoenix for its business environment and livability. Here’s a sampling: 6th Place, America’s Best Places to Live Money, Top 50 Cities to Live and Play, National Geographic Adventure, 3rd Hottest Town in the U.S., Money, Among 20 Best Places to Live & Work Employment Review, One of only 72 Sterling Tree Cities in the U.S., National Arbor Day Foundation, Top 10 best Locations to Raise a Family, Southern Business and Development, 1st Place, Kid Friendly Report Card, Population Connection, 2nd Best City in America to Live Business Development Outlook.

Phoenix is at the core of one of the most dynamic local markets in the U.S. It offers easy access to the Arizona City region’s amenities, and, as part of the Arizona City metropolitan area, it is within the most centrally located major market in the nation. I-35, I-435, I-635, and U.S. Highway 69 all pass through Phoenix, and no point in the city is more than 3.5 miles from a freeway. The city maintains an excellent arterial street network and plans to construct additional lane-miles as the area grows. Three airports serve the region. Arizona City International Airport (MCI) is just 25 interstate highway miles north of Phoenix. Johnson County Executive Airport—the second busiest in Arizona—provides complete services for private business jets and general aviation. New Century AirCenter, just 12 miles southwest of the city, offers available aviation services and accommodates cargo or passenger jets of any size.

Phoenix supplies some of the most highly educated workers in the nation, with 97% of Phoenix adults over age 25 holding at least a high school diploma. Johnson County, where Phoenix is located, ranks first among the country’s 231 counties with populations greater than 250,000. The county ranks sixth in the percentage of adults with at least a bachelor’s degree and 16th with a graduate or professional degree.

The Phoenix area has a population of 175,265, based on the 2010 census. The median household income is $77,881, and the median age is 37.9. (2010 U.S. Census)

Industry Analysis

The U.S. coffee shop industry includes about 20,000 stores with a combined annual revenue of about $10 billion. Major companies include Caribou Coffee, International Coffee & Tea (The Coffee Bean & Tea Leaf), Peet’s Coffee, and Starbucks. The industry is concentrated: the top 50 companies generate more than 70 percent of sales. Coffee shops are part of the specialty eatery industry, including retail outlets specializing in bagels, donuts, frozen yogurt, and ice cream products. (First Research)

Competitive Landscape

Consumer taste and personal income drive demand. The profitability of individual companies depends on the ability to secure prime locations, drive store traffic, and deliver high-quality products. Large companies have advantages in purchasing, finance, and marketing. Small companies can compete effectively by offering specialized products, serving a local market, or providing superior customer service. Specialty eateries, which include coffee shops, are labor-intensive: average annual revenue per worker is about $50,000. Coffee shops compete with convenience stores, gas stations, quick service, fast food restaurants, gourmet food shops, and donut shops. (First Research)

Market Size

The U.S. coffee shop industry includes about 20,000 stores with a combined annual revenue of about $10 billion. Major companies include Caribou Coffee, International Coffee & Tea (The Coffee Bean & Tea Leaf), Pet’s Coffee, and Starbucks. The industry is concentrated: the top 50 companies generate more than 70 percent of sales. (First Research)

Target Market and Segment Strategy

Most adult coffee drinkers said their lifelong habits began during their teenage years. 54% said they began drinking coffee between 13 and 19. Another 22% reported their coffee cravings started between 20 and 24. This means that 76% of adult coffee drinkers began drinking coffee by the time they were 24. So, despite a large amount of marketing and advertising directed at the younger age groups, savvy coffee shop owners will remember to cater some of their offerings to the adult and senior market. (National Coffee Drinking Study).

The Cooper’s Cup will offer a unique experience for coffee enthusiasts by providing a quiet, cozy, yet sophisticated cafe and a sense of refinement and peace in an otherwise hectic and fast-paced world. While other coffee shops cater to convenience with drive-throughs or loud music venues late into the night, the Cooper’s Cup will stand apart from its competitors with its quiet yet soothing ambiance, capturing a truly unique (and much-needed) market niche.

  • Unique products (specialized roasts, local ingredients, locally-themed or named drinks, custom drinks by the star barista, etc.)
  • Games, puzzles, mind benders, and other activities that encourage customers to linger over their coffee
  • Hosting or sponsoring local events (entertainment, readings, book clubs, etc.)
  • Using technology to creatively compete in marketing with big chains — services like FourSquare, Yelp, and Google Places can increase visibility in the local market.
  • Delivering amazing service from knowledgeable baristas — spend lots of time training staff and utilizing online services like the American Coffee & Barista School.
  • Selling coffee-related items (and tracking down any co-marketing opportunities with a local community college or another student-related group in the area)

4. Products and Services

Product/services descriptions.

The Cooper’s Cup’s primary offering is gourmet roasted coffees with mocha, carmelicious, white mocha, candy bar latte, and brewed coffee. Complementing the coffee will be a smoothie line including wild berry, strawberry, peach, mango, and lemonade. Rounding out the simple menu line will be pastries obtained from an outside supplier, freshly made and delivered daily. The pastry offerings may vary with seasonality, but the primary line will be muffins, bread, cookies, scones, and rolls.

menu

Product/Service Sourcing

The Cooper’s Cup has negotiated supplier agreements with several local food-service wholesalers and coffee wholesalers in the Phoenix area that have a reputation for quality and reliability:

  • Mean Beans Coffee Roasters
  • Phoenix Brewers
  • Healthy Harvest Bread Co.
  • Mary’s Organics

If one of the abovementioned specialty suppliers cannot meet their needs, the following national suppliers can provide all the food-service products they require. In addition, the following wholesalers will supply the cafe with general restaurant supplies:

  • Lawrence Food Products Corp.
  • Gerry Food Supply Inc.

Future Products/Services

Young families, which comprise Phoenix’s third largest market share, are often overlooked in the coffee market. Coffeehouses traditionally have not been considered ‘kid’ friendly. To overcome this hurdle, Cooper’s Cup has long-term plans (5 years) to open a 2nd coffee shop: A combination indoor play area/coffee bar. This concept allows parents and caregivers to meet and relax with other adults while the children can enjoy the indoor playground amenities.

Additional future services will include in-store sales for home purchases and an online store.

The website will have the option to purchase a prepaid gift card program – Prepaid gift cards provide immediate cash, reduce credit card transaction charges, and draw new customers to the business.

5. Sales and Marketing Strategies

Swot analysis.

swot-analysis

Unique Selling Proposition

The Cooper’s Cup stands out from a crowded sea of coffee chains and franchises. What sets it apart from the competition is primarily its smaller, cozier size combined with premium coffees served by knowledgeable baristas, providing so much energy and enthusiasm for its products.

Market Strategy and Positioning

The Cooper’s Cup utilizes a focus strategy on its Market. By specifically targeting three primary segments, they can cater specifically to their needs.

Senior Market (age 45+)

The Cooper’s Cup will target this Market simply by its well-selected location. Although this demographic group could readily drive downtown, they prefer a local cafe to unwind and relax and historically become some of the most loyal patrons.

Newly Hired Employees

The cafe will attract regular customers (weekly or more) – particularly the newly employed (first job) by providing free WIFI services and providing interesting games in the customer area.

Young Families

The third targeted Market, younger families, often find that coffeehouse is not ‘kid’ friendly. The company has long-term plans to create a combination coffee shop/play area so that parents and caregivers can meet with other adults while the children can enjoy the bounce houses, slides, and indoor playground equipment.

Pricing Strategy

The Cooper’s Cup primarily utilizes competition-based pricing. The cafe does not utilize coupons and discounts (other than opening promotions) because they believe that the most valuable customer demographic of daily coffee consumers is not influenced by discount programs or coupons.

Promotion and Advertising Strategy

  • Online Advertising – The Cooper’s Cup will advertise regularly on popular social media sites like Facebook. Compared to traditional print advertising, this is a cost-effective tactic that will allow them to reach prospects in a highly targeted way (e.g., based on criteria such as age, gender, geography, etc.).
  • Website – Cooper’s Cup will develop a simple Web site, which will provide basic information about the business, the menu, and links to their presence on the aforementioned social media channels.
  • Radio Advertising – During the first six months of operation and the busy holiday shopping season, the business will advertise on local radio stations.

Sales Strategy

The Cooper’s Cup will use the following methods to increase sales revenue (as recommended by Andrew Hetzel on Better Coffee, Better Business):

  • The menu will focus on the most profitable products sold. The cafe will always draw customer attention to the best products.
  • As warranted, the cafe will raise prices to bolster its brand image. Prices communicate the perceived value of a product, so if set too low, the customers might assume that the beverages are inferior compared to the competition.
  • Monitor flavoring inventory – Excess flavoring inventory ties up capital and valuable backroom space for storage. The cafe will utilize 4-6 varieties, including sugar-free offerings.
  • Control waste and theft – audit sales and inventory reports to evaluate ingredient waste due to inefficient preparation, returned drinks, and employee consumption. Retail locations can easily waste 20% or more of their daily sales in these three key categories, which is a substantial and unnecessary loss.
  • Monitor and evaluate hours of operation.
  • Run employee sales contests – The baristas are the salespeople and have great influence over the customer ordering process. All baristas will have some form of sales and customer service training to make each transaction active rather than passive. Sales contests will emphasize high-margin items or cross-selling.

6. Operations Plan

Staffing and training.

An ongoing training and education program will ensure that each staff member learns and implements Cooper’s Cup’s exacting service and operational procedures standards. Staff meetings will reinforce service standards and principles. The Cafe will have detailed work descriptions and training programs for each position, from entry-level employees to the ongoing development of managers and owners. New employees will undergo an extensive training program. This ensures that each guest receives a quality experience from all employees, regardless of how long they have been employed. The Cafe embraces the concept of promoting from within. Excellence in one function typically leads to excellence in another. Regular staff evaluations and training will ensure motivation and address critical issues.

Inventory controls

The founder will be responsible for hiring and training managers who, in turn, will ensure that the day-to-day operations will comply with the standards set by Restaurant policy. Weekly management meetings will provide a forum to review and discuss financial and operational performance. Critical decisions related to purchasing, human resources, marketing, capital expenditures, and customer service will also be addressed.

Purchasing cost controls

Food preparation personnel will follow standardized recipes developed by the founders to control food costs and ensure consistency. The coffee shop will offer an innovative menu with nutritious food and beverages while achieving the most significant margin yield.

Customer Service

The hospitality business recognizes the client’s support experience is the critical driver to replicate business. The direction will Offer a superior degree of Professionalism by hiring individuals who deliver the ideal attitude to work and teaching them the skills required to accommodate guests. The restaurant will keep high levels of consumer satisfaction with talented, educated, and well-trained workers who understand and implement the fundamentals of fantastic service. Ongoing training will be provided to enable staff to perform their jobs with confidence and ability. Employees are well-spoken, well-versed, and trained to provide friendly, prompt, and professional service to each customer. This practice teaches employees who, by producing an exceptional customer experience, can optimize sales and raise their reimbursement. The team will have the knowledge and service required to create excellent daily service for every customer.

Technology & Software

While the quality of the cuisine and dining experience contributes significantly to a restaurant’s profitability, attention to business and financial details can transform small changes into significant returns. Critical sales, cost of sales, labor, inventory, marketing, and overhead metrics are monitored daily. Trends are evaluated, and constructive actions will be taken where improvement is needed. The management team will have access to the restaurant’s transactions and reports available in its real-time POS (point of sale) and accounting systems. Trends will be evaluated, and corrective action will be implemented as required.

7. Organization Structure

The Cooper’s Cup is formed as an S-Corporation wholly owned by John Doe.

Management Team

The Cooper’s Cup will be owned 100% by John Doe. Mr. Doe, a graduate of Arizona State University, has an undergraduate degree in business administration. During high school, he worked as a waiter in a local hospital coffee shop that purchased its beans from a local roaster. In addition to being an avid coffee drinker, this job allowed him to learn about the business first-hand. In college, Doe worked in a campus coffeehouse for four years, eventually becoming an assistant manager. Following graduation, Doe secured a business development position for a regional restaurant chain, which provided additional first-hand exposure to the food and beverage industry—especially the steps involved in establishing new locations.

Management Team Gaps

The Cooper’s Cup will rely on its POS (Point of Sale) system to generate daily accounting and cost activity reports. Mr. Doe will supply these to an outside bookkeeper for the preparation of annual income taxes.

Personnel Plan

Initially, the cafe will hire 1 manager, 5 baristas, and 2 part-time servers. In Year 2, the cafe plans to hire 1 additional full-time barista.

8. Financial Plan

Important assumptions.

  • The sales forecast is conservative and assumes a 5% increase in Year 2 and a 10% in Year 3.
  • The analysis accounts for economic seasonality – wherein some month’s revenues peak (such as holidays ) and wane in slower months.
  • The analysis assumes the owner will not withdraw any salary till the 3rd year; at any time it is assumed that the owner’s withdrawal is available at his discretion.
  • Sales are cash basis – nonaccrual accounting
  • Moderate ramp-up in staff over the 5 years forecast
  • Barista’s salary in the forecast is $36,000 in 2023.
  • In general, most cafes have an 85% gross profit margin
  • In general, most cafes have a 3% net profit margin

Projected Balance Sheet

balance sheet

Projected Cash-Flow Statement

cash flow

Projected Profit & Loss Statement

profit and loss

Break Even Analysis

break-even

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Frequently Asked Questions

How do you write a business plan for a college project.

As mentioned earlier in the article, business planning for a college project or competition is no different than for a real business. You can write your business plan using these step-by-step instructions.

  • Select a compelling business idea
  • Refer to business plan examples
  • Prepare a business plan outline
  • Create a company description section
  • Conduct market research and industry analysis
  • Describe your product and services
  • Outline sales and marketing strategies
  • Create an operations plan
  • Introduce management team
  • Prepare financial projections
  • Summarize your plan with an executive summary

What is a business plan for students?

A business plan is a necessary business document that highlights its purpose,  business goals, product/service offerings, go-to marketing strategies, operations and financial plan, key people involved in the business operations, and other necessary details.

As a student, consider a business plan example as a document that helps you better understand business and industry dynamics and learn how a business operates inside out.

What is a business plan competition for students?

Business plan competitions are competitions mostly organized by universities for students passionate about entrepreneurship and the business world. These competitions offer students a platform to showcase their entrepreneurial skills while also providing opportunities for mentorship and networking.

How can I increase my chances of winning a business plan competition?

There cannot be a straightforward answer to this question, but there’s surely a method that can increase your chances of winning a competition—Using AI-powered business plan software.

Why? An AI tool will make you 10X more productive while writing a business plan and preparing financial forecasts. So you can spend more time researching the market and brainstorming business ideas.

Where can I find more business plan examples for students?

Upmetrics’ library of 400+ business plan examples could be an incredible source for students to find more industry-specific business plan examples. There are examples for almost every small business category, including real estate, retail, entertainment and media, food & beverages, and more.

About the Author

what is the importance of a business plan to students

Ajay is a SaaS writer and personal finance blogger who has been active in the space for over three years, writing about startups, business planning, budgeting, credit cards, and other topics related to personal finance. If not writing, he’s probably having a power nap. Read more

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– Don’t Miss It

Do you REALLY need a business plan?

The top three questions that I get asked most frequently as a professional business plan writer will probably not surprise you:

  • What is the purpose of a business plan – why is it really required?
  • How is it going to benefit my business if I write a business plan?
  • Is a business plan really that important – how can I actually use it?

Keep reading to get my take on what the most essential advantages of preparing a business plan are—and why you may (not) need to prepare one.

Business Plan Purpose and Importance

The importance, purpose and benefit of a business plan is in that it enables you to validate a business idea, secure funding, set strategic goals – and then take organized action on those goals by making decisions, managing resources, risk and change, while effectively communicating with stakeholders.

Let’s take a closer look at how each of the important business planning benefits can catapult your business forward:

1. Validate Your Business Idea

The process of writing your business plan will force you to ask the difficult questions about the major components of your business, including:

  • External: industry, target market of prospective customers, competitive landscape
  • Internal: business model, unique selling proposition, operations, marketing, finance

Business planning connects the dots to draw a big picture of the entire business.

And imagine how much time and money you would save if working through a business plan revealed that your business idea is untenable. You would be surprised how often that happens – an idea that once sounded so very promising may easily fall apart after you actually write down all the facts, details and numbers.

While you may be tempted to jump directly into start-up mode, writing a business plan is an essential first step to check the feasibility of a business before investing too much time and money into it. Business plans help to confirm that the idea you are so passionate and convinced about is solid from business point of view.

Take the time to do the necessary research and work through a proper business plan. The more you know, the higher the likelihood that your business will succeed.

2. Set and Track Goals

Successful businesses are dynamic and continuously evolve. And so are good business plans that allow you to:

  • Priorities: Regularly set goals, targets (e.g., sales revenues reached), milestones (e.g. number of employees hired), performance indicators and metrics for short, mid and long term
  • Accountability: Track your progress toward goals and benchmarks
  • Course-correction: make changes to your business as you learn more about your market and what works and what does not
  • Mission: Refer to a clear set of values to help steer your business through any times of trouble

Essentially, business plan is a blueprint and an important strategic tool that keeps you focused, motivated and accountable to keep your business on track. When used properly and consulted regularly, it can help you measure and manage what you are working so hard to create – your long-term vision.

As humans, we work better when we have clear goals we can work towards. The everyday business hustle makes it challenging to keep an eye on the strategic priorities. The business planning process serves as a useful reminder.

3. Take Action

A business plan is also a plan of action . At its core, your plan identifies where you are now, where you want your business to go, and how you will get there.

Planning out exactly how you are going to turn your vision into a successful business is perhaps the most important step between an idea and reality. Success comes not only from having a vision but working towards that vision in a systematic and organized way.

A good business plan clearly outlines specific steps necessary to turn the business objectives into reality. Think of it as a roadmap to success. The strategy and tactics need to be in alignment to make sure that your day-to-day activities lead to the achievement of your business goals.

4. Manage Resources

A business plan also provides insight on how resources required for achieving your business goals will be structured and allocated according to their strategic priority. For example:

Large Spending Decisions

  • Assets: When and in what amount will the business commit resources to buy/lease new assets, such as computers or vehicles.
  • Human Resources: Objectives for hiring new employees, including not only their pay but how they will help the business grow and flourish.
  • Business Space: Information on costs of renting/buying space for offices, retail, manufacturing or other operations, for example when expanding to a new location.

Cash Flow It is essential that a business carefully plans and manages cash flows to ensure that there are optimal levels of cash in the bank at all times and avoid situations where the business could run out of cash and could not afford to pay its bills.

Revenues v. Expenses In addition, your business plan will compare your revenue forecasts to the budgeted costs to make sure that your financials are healthy and the business is set up for success.

5. Make Decisions

Whether you are starting a small business or expanding an existing one, a business plan is an important tool to help guide your decisions:

Sound decisions Gathering information for the business plan boosts your knowledge across many important areas of the business:

  • Industry, market, customers and competitors
  • Financial projections (e.g., revenue, expenses, assets, cash flow)
  • Operations, technology and logistics
  • Human resources (management and staff)
  • Creating value for your customer through products and services

Decision-making skills The business planning process involves thorough research and critical thinking about many intertwined and complex business issues. As a result, it solidifies the decision-making skills of the business owner and builds a solid foundation for strategic planning , prioritization and sound decision making in your business. The more you understand, the better your decisions will be.

Planning Thorough planning allows you to determine the answer to some of the most critical business decisions ahead of time , prepare for anticipate problems before they arise, and ensure that any tactical solutions are in line with the overall strategy and goals.

If you do not take time to plan, you risk becoming overwhelmed by countless options and conflicting directions because you are not unclear about the mission , vision and strategy for your business.

6. Manage Risk

Some level of uncertainty is inherent in every business, but there is a lot you can do to reduce and manage the risk, starting with a business plan to uncover your weak spots.

You will need to take a realistic and pragmatic look at the hard facts and identify:

  • Major risks , challenges and obstacles that you can expect on the way – so you can prepare to deal with them.
  • Weaknesses in your business idea, business model and strategy – so you can fix them.
  • Critical mistakes before they arise – so you can avoid them.

Essentially, the business plan is your safety net . Naturally, business plan cannot entirely eliminate risk, but it can significantly reduce it and prepare you for any challenges you may encounter.

7. Communicate Internally

Attract talent For a business to succeed, attracting talented workers and partners is of vital importance.

A business plan can be used as a communication tool to attract the right talent at all levels, from skilled staff to executive management, to work for your business by explaining the direction and growth potential of the business in a presentable format.

Align performance Sharing your business plan with all team members helps to ensure that everyone is on the same page when it comes to the long-term vision and strategy.

You need their buy-in from the beginning, because aligning your team with your priorities will increase the efficiency of your business as everyone is working towards a common goal .

If everyone on your team understands that their piece of work matters and how it fits into the big picture, they are more invested in achieving the objectives of the business.

It also makes it easier to track and communicate on your progress.

Share and explain business objectives with your management team, employees and new hires. Make selected portions of your business plan part of your new employee training.

8. Communicate Externally

Alliances If you are interested in partnerships or joint ventures, you may share selected sections of your plan with the potential business partners in order to develop new alliances.

Suppliers A business plan can play a part in attracting reliable suppliers and getting approved for business credit from suppliers. Suppliers who feel confident that your business will succeed (e.g., sales projections) will be much more likely to extend credit.

In addition, suppliers may want to ensure their products are being represented in the right way .

Professional Services Having a business plan in place allows you to easily share relevant sections with those you rely on to support the organization, including attorneys, accountants, and other professional consultants as needed, to make sure that everyone is on the same page.

Advisors Share the plan with experts and professionals who are in a position to give you valuable advice.

Landlord Some landlords and property managers require businesses to submit a business plan to be considered for a lease to prove that your business will have sufficient cash flows to pay the rent.

Customers The business plan may also function as a prospectus for potential customers, especially when it comes to large corporate accounts and exclusive customer relationships.

9. Secure Funding

If you intend to seek outside financing for your business, you are likely going to need a business plan.

Whether you are seeking debt financing (e.g. loan or credit line) from a lender (e.g., bank or financial institution) or equity capital financing from investors (e.g., venture or angel capital), a business plan can make the difference between whether or not – and how much – someone decides to invest.

Investors and financiers are always looking at the risk of default and the earning potential based on facts and figures. Understandably, anyone who is interested in supporting your business will want to check that you know what you are doing, that their money is in good hands, and that the venture is viable in the long run.

Business plans tend to be the most effective ways of proving that. A presentation may pique their interest , but they will most probably request a well-written document they can study in detail before they will be prepared to make any financial commitment.

That is why a business plan can often be the single most important document you can present to potential investors/financiers that will provide the structure and confidence that they need to make decisions about funding and supporting your company.

Be prepared to have your business plan scrutinized . Investors and financiers will conduct extensive checks and analyses to be certain that what is written in your business plan faithful representation of the truth.

10. Grow and Change

It is a very common misconception that a business plan is a static document that a new business prepares once in the start-up phase and then happily forgets about.

But businesses are not static. And neither are business plans. The business plan for any business will change over time as the company evolves and expands .

In the growth phase, an updated business plan is particularly useful for:

Raising additional capital for expansion

  • Seeking financing for new assets , such as equipment or property
  • Securing financing to support steady cash flows (e.g., seasonality, market downturns, timing of sale/purchase invoices)
  • Forecasting to allocate resources according to strategic priority and operational needs
  • Valuation (e.g., mergers & acquisitions, tax issues, transactions related to divorce, inheritance, estate planning)

Keeping the business plan updated gives established businesses better chance of getting the money they need to grow or even keep operating.

Business plan is also an excellent tool for planning an exit as it would include the strategy and timelines for a transfer to new ownership or dissolution of the company.

Also, if you ever make the decision to sell your business or position yourself for a merger or an acquisition , a strong business plan in hand is going to help you to maximize the business valuation.

Valuation is the process of establishing the worth of a business by a valuation expert who will draw on professional experience as well as a business plan that will outline what you have, what it’s worth now and how much will it likely produce in the future.

Your business is likely to be worth more to a buyer if they clearly understand your business model, your market, your assets and your overall potential to grow and scale .

Related Questions

Business plan purpose: what is the purpose of a business plan.

The purpose of a business plan is to articulate a strategy for starting a new business or growing an existing one by identifying where the business is going and how it will get there to test the viability of a business idea and maximize the chances of securing funding and achieving business goals and success.

Business Plan Benefits: What are the benefits of a business plan?

A business plan benefits businesses by serving as a strategic tool outlining the steps and resources required to achieve goals and make business ideas succeed, as well as a communication tool allowing businesses to articulate their strategy to stakeholders that support the business.

Business Plan Importance: Why is business plan important?

The importance of a business plan lies in it being a roadmap that guides the decisions of a business on the road to success, providing clarity on all aspects of its operations. This blueprint outlines the goals of the business and what exactly is needed to achieve them through effective management.

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The importance of business plan: 5 key reasons.

The Importance of Business Plan: 5 Key Reasons

A key part of any business is its business plan. They can help define the goals of your business and help it reach success. A good business plan can also help you develop an adequate marketing strategy. There are a number of reasons all business owners need business plans, keep reading to learn more!

Here’s What We’ll Cover:

What Is a Business Plan?

5 reasons you need a well-written business plan, how do i make a business plan, key takeaways.

A business plan contains detailed information that can help determine its success. Some of this information can include the following:

  • Market analysis
  • Cash flow projection
  • Competitive analysis
  • Financial statements and financial projections
  • An operating plan

A solid business plan is a good way to attract potential investors. It can also help you display to business partners that you have a successful business growing. In a competitive landscape, a formal business plan is your key to success.

what is the importance of a business plan to students

Check out all of the biggest reasons you need a good business plan below.

1. To Secure Funding

Whether you’re seeking funding from a venture capitalist or a bank, you’ll need a business plan. Business plans are the foundation of a business. They tell the parties that you’re seeking funding from whether or not you’re worth investing in. If you need any sort of outside financing, you’ll need a good business plan to secure it.

2. Set and Communicate Goals

A business plan gives you a tangible way of reviewing your business goals. Business plans revolve around the present and the future. When you establish your goals and put them in writing, you’re more likely to reach them. A strong business plan includes these goals, and allows you to communicate them to investors and employees alike.

3. Prove Viability in the Market

While many businesses are born from passion, not many will last without an effective business plan. While a business concept may seem sound, things may change once the specifics are written down. Often, people who attempt to start a business without a plan will fail. This is because they don’t take into account all of the planning and funds needed to get a business off of the ground.

Market research is a large part of the business planning process. It lets you review your potential customers, as well as the competition, in your field. By understanding both you can set price points for products or services. Sometimes, it may not make sense to start a business based on the existing competition. Other times, market research can guide you to effective marketing strategies that others lack. To have a successful business, it has to be viable. A business plan will help you determine that.

4. They Help Owners Avoid Failure

Far too often, small businesses fail. Many times, this is due to the lack of a strong business plan. There are many reasons that small businesses fail, most of which can be avoided by developing a business plan. Some of them are listed below, which can be avoided by having a business plan:

  • The market doesn’t need the business’s product or service
  • The business didn’t take into account the amount of capital needed
  • The market is oversaturated
  • The prices set by the business are too high, pushing potential customers away

Any good business plan includes information to help business owners avoid these issues.

what is the importance of a business plan to students

5. Business Plans Reduce Risk

Related to the last reason, business plans help reduce risk. A well-thought-out business plan helps reduce risky decisions. They help business owners make informed decisions based on the research they conduct. Any business owner can tell you that the most important part of their job is making critical decisions. A business plan that factors in all possible situations helps make those decisions.

Luckily, there are plenty of tools available to help you create a business plan. A simple search can lead you to helpful tools, like a business plan template . These are helpful, as they let you fill in the information as you go. Many of them provide basic instructions on how to create the business plan, as well.

If you plan on starting a business, you’ll need a business plan. They’re good for a vast number of things. Business plans help owners make informed decisions, as well as set goals and secure funding. Don’t put off putting together your business plan!

If you’re in the planning stages of your business, be sure to check out our resource hub . We have plenty of valuable resources and articles for you when you’re just getting started. Check it out today!

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Table of Contents

What is a business plan, the advantages of having a business plan, the types of business plans, the key elements of a business plan, best business plan software, common challenges of writing a business plan, become an expert business planner, business planning: it’s importance, types and key elements.

Business Planning: It’s Importance, Types and Key Elements

Every year, thousands of new businesses see the light of the day. One look at the  World Bank's Entrepreneurship Survey and database  shows the mind-boggling rate of new business registrations. However, sadly, only a tiny percentage of them have a chance of survival.   

According to the Bureau of Labor Statistics, about 20% of small businesses fail in their first year, about 50% in their fifth year.

Research from the University of Tennessee found that 44% of businesses fail within the first three years. Among those that operate within specific sectors, like information (which includes most tech firms), 63% shut shop within three years.

Several  other statistics  expose the abysmal rates of business failure. But why are so many businesses bound to fail? Most studies mention "lack of business planning" as one of the reasons.

This isn’t surprising at all. 

Running a business without a plan is like riding a motorcycle up a craggy cliff blindfolded. Yet, way too many firms ( a whopping 67%)  don't have a formal business plan in place. 

It doesn't matter if you're a startup with a great idea or a business with an excellent product. You can only go so far without a roadmap — a business plan. Only, a business plan is so much more than just a roadmap. A solid plan allows a business to weather market challenges and pivot quickly in the face of crisis, like the one global businesses are struggling with right now, in the post-pandemic world.  

But before you can go ahead and develop a great business plan, you need to know the basics. In this article, we'll discuss the fundamentals of business planning to help you plan effectively for 2021.  

Now before we begin with the details of business planning, let us understand what it is.

No two businesses have an identical business plan, even if they operate within the same industry. So one business plan can look entirely different from another one. Still, for the sake of simplicity, a business plan can be defined as a guide for a company to operate and achieve its goals.  

More specifically, it's a document in writing that outlines the goals, objectives, and purpose of a business while laying out the blueprint for its day-to-day operations and key functions such as marketing, finance, and expansion.

A good business plan can be a game-changer for startups that are looking to raise funds to grow and scale. It convinces prospective investors that the venture will be profitable and provides a realistic outlook on how much profit is on the cards and by when it will be attained. 

However, it's not only new businesses that greatly benefit from a business plan. Well-established companies and large conglomerates also need to tweak their business plans to adapt to new business environments and unpredictable market changes. 

Before getting into learning more about business planning, let us learn the advantages of having one.

Since a detailed business plan offers a birds-eye view of the entire framework of an establishment, it has several benefits that make it an important part of any organization. Here are few ways a business plan can offer significant competitive edge.

  • Sets objectives and benchmarks: Proper planning helps a business set realistic objectives and assign stipulated time for those goals to be met. This results in long-term profitability. It also lets a company set benchmarks and Key Performance Indicators (KPIs) necessary to reach its goals. 
  • Maximizes resource allocation: A good business plan helps to effectively organize and allocate the company’s resources. It provides an understanding of the result of actions, such as, opening new offices, recruiting fresh staff, change in production, and so on. It also helps the business estimate the financial impact of such actions.
  • Enhances viability: A plan greatly contributes towards turning concepts into reality. Though business plans vary from company to company, the blueprints of successful companies often serve as an excellent guide for nascent-stage start-ups and new entrepreneurs. It also helps existing firms to market, advertise, and promote new products and services into the market.
  • Aids in decision making: Running a business involves a lot of decision making: where to pitch, where to locate, what to sell, what to charge — the list goes on. A well thought-out business plan provides an organization the ability to anticipate the curveballs that the future could throw at them. It allows them to come up with answers and solutions to these issues well in advance.
  • Fix past mistakes: When businesses create plans keeping in mind the flaws and failures of the past and what worked for them and what didn’t, it can help them save time, money, and resources. Such plans that reflects the lessons learnt from the past offers businesses an opportunity to avoid future pitfalls.
  • Attracts investors: A business plan gives investors an in-depth idea about the objectives, structure, and validity of a firm. It helps to secure their confidence and encourages them to invest. 

Now let's look at the various types involved in business planning.

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Business plans are formulated according to the needs of a business. It can be a simple one-page document or an elaborate 40-page affair, or anything in between. While there’s no rule set in stone as to what exactly a business plan can or can’t contain, there are a few common types of business plan that nearly all businesses in existence use.  

Here’s an overview of a few fundamental types of business plans. 

  • Start-up plan: As the name suggests, this is a documentation of the plans, structure, and objections of a new business establishments. It describes the products and services that are to be produced by the firm, the staff management, and market analysis of their production. Often, a detailed finance spreadsheet is also attached to this document for investors to determine the viability of the new business set-up.
  • Feasibility plan: A feasibility plan evaluates the prospective customers of the products or services that are to be produced by a company. It also estimates the possibility of a profit or a loss of a venture. It helps to forecast how well a product will sell at the market, the duration it will require to yield results, and the profit margin that it will secure on investments. 
  • Expansion Plan: This kind of plan is primarily framed when a company decided to expand in terms of production or structure. It lays down the fundamental steps and guidelines with regards to internal or external growth. It helps the firm to analyze the activities like resource allocation for increased production, financial investments, employment of extra staff, and much more.
  • Operations Plan: An operational plan is also called an annual plan. This details the day-to-day activities and strategies that a business needs to follow in order to materialize its targets. It outlines the roles and responsibilities of the managing body, the various departments, and the company’s employees for the holistic success of the firm.
  • Strategic Plan: This document caters to the internal strategies of the company and is a part of the foundational grounds of the establishments. It can be accurately drafted with the help of a SWOT analysis through which the strengths, weaknesses, opportunities, and threats can be categorized and evaluated so that to develop means for optimizing profits.

There is some preliminary work that’s required before you actually sit down to write a plan for your business. Knowing what goes into a business plan is one of them. 

Here are the key elements of a good business plan:

  • Executive Summary: An executive summary gives a clear picture of the strategies and goals of your business right at the outset. Though its value is often understated, it can be extremely helpful in creating the readers’ first impression of your business. As such, it could define the opinions of customers and investors from the get-go.  
  • Business Description: A thorough business description removes room for any ambiguity from your processes. An excellent business description will explain the size and structure of the firm as well as its position in the market. It also describes the kind of products and services that the company offers. It even states as to whether the company is old and established or new and aspiring. Most importantly, it highlights the USP of the products or services as compared to your competitors in the market.
  • Market Analysis: A systematic market analysis helps to determine the current position of a business and analyzes its scope for future expansions. This can help in evaluating investments, promotions, marketing, and distribution of products. In-depth market understanding also helps a business combat competition and make plans for long-term success.
  • Operations and Management: Much like a statement of purpose, this allows an enterprise to explain its uniqueness to its readers and customers. It showcases the ways in which the firm can deliver greater and superior products at cheaper rates and in relatively less time. 
  • Financial Plan: This is the most important element of a business plan and is primarily addressed to investors and sponsors. It requires a firm to reveal its financial policies and market analysis. At times, a 5-year financial report is also required to be included to show past performances and profits. The financial plan draws out the current business strategies, future projections, and the total estimated worth of the firm.

The importance of business planning is it simplifies the planning of your company's finances to present this information to a bank or investors. Here are the best business plan software providers available right now:

  • Business Sorter

The importance of business planning cannot be emphasized enough, but it can be challenging to write a business plan. Here are a few issues to consider before you start your business planning:

  • Create a business plan to determine your company's direction, obtain financing, and attract investors.
  • Identifying financial, demographic, and achievable goals is a common challenge when writing a business plan.
  • Some entrepreneurs struggle to write a business plan that is concise, interesting, and informative enough to demonstrate the viability of their business idea.
  • You can streamline your business planning process by conducting research, speaking with experts and peers, and working with a business consultant.

Whether you’re running your own business or in-charge of ensuring strategic performance and growth for your employer or clients, knowing the ins and outs of business planning can set you up for success. 

Be it the launch of a new and exciting product or an expansion of operations, business planning is the necessity of all large and small companies. Which is why the need for professionals with superior business planning skills will never die out. In fact, their demand is on the rise with global firms putting emphasis on business analysis and planning to cope with cut-throat competition and market uncertainties.

While some are natural-born planners, most people have to work to develop this important skill. Plus, business planning requires you to understand the fundamentals of business management and be familiar with business analysis techniques . It also requires you to have a working knowledge of data visualization, project management, and monitoring tools commonly used by businesses today.   

Simpliearn’s Executive Certificate Program in General Management will help you develop and hone the required skills to become an extraordinary business planner. This comprehensive general management program by IIM Indore can serve as a career catalyst, equipping professionals with a competitive edge in the ever-evolving business environment.

What Is Meant by Business Planning?

Business planning is developing a company's mission or goals and defining the strategies you will use to achieve those goals or tasks. The process can be extensive, encompassing all aspects of the operation, or it can be concrete, focusing on specific functions within the overall corporate structure.

What Are the 4 Types of Business Plans?

The following are the four types of business plans:

Operational Planning

This type of planning typically describes the company's day-to-day operations. Single-use plans are developed for events and activities that occur only once (such as a single marketing campaign). Ongoing plans include problem-solving policies, rules for specific regulations, and procedures for a step-by-step process for achieving particular goals.

Strategic Planning

Strategic plans are all about why things must occur. A high-level overview of the entire business is included in strategic planning. It is the organization's foundation and will dictate long-term decisions.

Tactical Planning

Tactical plans are about what will happen. Strategic planning is aided by tactical planning. It outlines the tactics the organization intends to employ to achieve the goals outlined in the strategic plan.

Contingency Planning

When something unexpected occurs or something needs to be changed, contingency plans are created. In situations where a change is required, contingency planning can be beneficial.

What Are the 7 Steps of a Business Plan?

The following are the seven steps required for a business plan:

Conduct Research

If your company is to run a viable business plan and attract investors, your information must be of the highest quality.

Have a Goal

The goal must be unambiguous. You will waste your time if you don't know why you're writing a business plan. Knowing also implies having a target audience for when the plan is expected to get completed.

Create a Company Profile

Some refer to it as a company profile, while others refer to it as a snapshot. It's designed to be mentally quick and digestible because it needs to stick in the reader's mind quickly since more information is provided later in the plan.

Describe the Company in Detail

Explain the company's current situation, both good and bad. Details should also include patents, licenses, copyrights, and unique strengths that no one else has.

Create a marketing plan ahead of time.

A strategic marketing plan is required because it outlines how your product or service will be communicated, delivered, and sold to customers.

Be Willing to Change Your Plan for the Sake of Your Audience

Another standard error is that people only write one business plan. Startups have several versions, just as candidates have numerous resumes for various potential employers.

Incorporate Your Motivation

Your motivation must be a compelling reason for people to believe your company will succeed in all circumstances. A mission should drive a business, not just selling, to make money. That mission is defined by your motivation as specified in your business plan.

What Are the Basic Steps in Business Planning?

These are the basic steps in business planning:

Summary and Objectives

Briefly describe your company, its objectives, and your plan to keep it running.

Services and Products

Add specifics to your detailed description of the product or service you intend to offer. Where, why, and how much you plan to sell your product or service and any special offers.

Conduct research on your industry and the ideal customers to whom you want to sell. Identify the issues you want to solve for your customers.

Operations are the process of running your business, including the people, skills, and experience required to make it successful.

How are you going to reach your target audience? How you intend to sell to them may include positioning, pricing, promotion, and distribution.

Consider funding costs, operating expenses, and projected income. Include your financial objectives and a breakdown of what it takes to make your company profitable. With proper business planning through the help of support, system, and mentorship, it is easy to start a business.

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10 Important Business Skills Every Professional Needs

Woman typing on a laptop surrounded by papers, calculator, and phone

  • 23 May 2019

Understanding essential business concepts and tools can benefit all professionals.

For example, it’s critical for business owners to ensure all members of their organizations are equipped with skills like critical thinking, time management, and effective communication to ensure daily operations run smoothly and reach business goals.

Here’s an overview of why it’s important to improve your business skills and ten you should prioritize to advance your career.

Access your free e-book today.

Why Is It Important to Improve Your Business Skills?

A foundation in business can not only lead to greater confidence in the workplace but open the door to a myriad of career opportunities. For those who've broadened their knowledge by taking a Harvard Business School Online course , the experience has led to such outcomes as:

  • More responsibility at work
  • A promotion or title change
  • Greater attention from recruiters
  • The ability to transition into a new field

If you want to achieve similar objectives in your career, here are ten business skills you should develop.

infographic displaying 10 valuable business skills for workplace success

Business Skills Every Professional Needs

1. an understanding of economics.

A baseline knowledge of economics can be valuable in any industry. In addition to an in-depth understanding of pricing strategies and market demand, studying economics can provide a toolkit for making key decisions at your company.

For Nicholas Grecco , a former CORe participant who works as an educator and healthcare administrator, the lessons learned in Economics for Managers were instrumental in helping his organization invest in solar energy.

“I knew investment in solar was a good opportunity, but the concept of willingness to sell (WTS) helped me to understand and explain why,” Grecco says. “Because of extra incentives from the city program and group purchasing power, the electrical contractors were willing to sell solar energy systems for a much lower price than usual, thereby increasing our consumer surplus. By explaining WTS, I was able to convince the owner to move forward with this project.”

Related: A Beginner’s Guide to Value-Based Strategy

2. Data Analysis Skills

Research shows that an increasing share of firms—including Microsoft, Uber, and Blue Apron —use analytics to generate growth and improve their services and operations.

According to LinkedIn, analytical reasoning is one of the most sought-after hard skills in today’s job market. Knowing how to summarize datasets , recognize trends, and test hypotheses can provide an analytical framework for approaching complex business problems and help you make informed decisions that benefit your firm.

“Using data analytics is a very effective way to have influence in an organization,” says HBS Professor Jan Hammond , who teaches the online course Business Analytics . “If you’re able to go into a meeting, and other people have opinions, but you have data to support your arguments and recommendations, you’re going to be influential.”

3. Financial Accounting Skills

Accounting know-how can be beneficial to your career, even if you’re not in a numbers-focused role. While it can seem like an intimidating subject, it’s far more approachable than you might think.

Concepts such as cash flow and profitability are useful for understanding your organization’s performance and potential, while knowing how to read and interpret a balance sheet is critical for communicating financial results .

Pankaj Prashant , an engineer who took CORe, says the principles he learned in Financial Accounting helped him build on his technical background and advance his career.

“I’ve been keeping track of my company’s annual reports, and the accounting that I learned helps me in understanding where the business may head in the future,” Prashant says. “I’ve also been tracking a few other companies for investment purposes, and I’ve realized I can make more informed decisions with my improved knowledge of company financials.”

Related: 7 Business Skills Every Engineer Needs

4. Negotiation Skills

Whether you’re just beginning your professional journey or operating at a senior level, it pays to be an effective negotiator. In a report by the World Economic Forum , negotiation was identified as one of the top 10 people skills needed to thrive in the future workforce.

Honing your deal-making skills can not only help secure value for your organization at the bargaining table but for yourself when advocating for a higher starting salary or raise .

There’s no one-size-fits-all approach to crafting a successful negotiation strategy . The key, according to HBS Professor Mike Wheeler , who teaches Negotiation Mastery , is to be open to improvisation and plan to think on your feet.

“However you happen to see yourself as a negotiator, most people you deal with likely have a different style, at least to some degree,” Wheeler says. “To succeed, therefore, you must be agile. That means flexing yourself so that you deploy different skills depending on the situation and whom you’re dealing with.”

Related: What’s Your Negotiation Style?

5. Business Management Skills

Strong managerial skills are intrinsically linked to organizational performance. A study by Gallup found that managers account for 70 percent of variance in employee engagement, underscoring the need for companies to develop leaders who drive team productivity and morale.

For seasoned and aspiring managers alike, it’s valuable to know how to lead meetings and communicate organizational change . Equally important is being aware of the common missteps team leaders make.

In the case of Monica Higgins , a public relations account director, taking the online course Management Essentials was a way to augment her managerial knowledge and develop a fresh outlook in her role.

“I'm more aware of looking at things through a larger lens, from a variety of perspectives,” Higgins says. “I've always been a fan of asking thoughtful, learning questions—as opposed to making declarations—and I'm now a big fan of playing devil's advocate.”

Related: 7 Effective Ways to Become a Better Manager

6. Leadership Skills

Whether you hold a management position or not, leadership skills are vital to workplace success. While some people think of leadership and management as one and the same, there are differences between the two . Whereas management is centered on implementing processes, leadership is more focused on the people and vision that guide change.

In addition to honing your management skills, building your leadership skills can be beneficial in any profession. From learning to keep calm during times of pressure to developing your own leadership style , these skills can help you understand how to bring your vision to life and position your team for success.

7. Effective Communication

In any business setting, professionals rely on communication to coordinate efforts and accomplish organizational goals. Ineffective communication—or a lack of communication altogether—can prove catastrophic.

Along with developing your skills, a large contributor to success is understanding and adapting to others' communication styles. Other key communication skills include active listening, empathy, and reading body language.

8. Emotional Intelligence

Emotional intelligence is another essential business skill, and research shows it’s a leading indicator of performance in the workplace. According to a study by TalentSmart , 90 percent of top performers have a high degree of emotional intelligence.

Emotional intelligence is commonly broken down into four concepts: self-awareness, self-management, social awareness, and relationship management. In short, this skill refers to your ability to understand your emotions and recognize and influence those of others.

No matter your industry or position, having awareness of yourself and those around you can enable you to have more control over your interactions and effectively accomplish goals.

9. Decision-Making Skills

All professionals need strong decision-making skills to navigate complex workplace challenges. For those specifically working in business or management, the need for such skills is even greater.

Determining how to allocate resources, which employees comprise a team, and how to implement a new organizational initiative are all decisions that need careful consideration. With the growing number of tools and resources that can be used to capture data, managers can fuel their processes with valuable insights to make data-driven decisions and generate better outcomes.

Related: 8 Steps in the Decision-Making Process

10. Networking

Networking is another critical business skill that all professionals should exercise.

Whether you want ideas or advice on a specific challenge or are preparing for a career change, the people who make up your professional network can be valuable resources.

Related: How Leaders Develop and Use Their Network

To make the most of your network, be open to opportunities to step out of your comfort zone and build new relationships. Once you have your network in place, it’s important to maintain relationships you’ve formed and find new ways to expand your web of contacts.

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How to Improve Your Business Knowledge

If you aim to advance your career, the value of business skills can’t be overstated. In addition to hard skills (such as financial accounting and an understanding of economics), you need soft skills (such as emotional intelligence and leadership) as your organization grows.

No matter your industry, knowledge of essential business concepts can help you better understand your organization’s performance and acquire the tools needed to spearhead initiatives and drive strategic decision-making.

Do you want to take your career to the next level? Explore our online business essentials courses . Download our free flowchart to choose the right course for you.

This post was updated on August 19, 2022. It was originally published on May 23, 2019.

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8 Time Management Tips for Students

Don't let a hectic schedule get the better of you with these time management tips.

Lian Parsons

College can be a stressful time for many students and time management can be one of the most crucial — but tricky — skills to master.

Attending classes, studying for exams, making friends, and taking time to relax and decompress can quickly fill up your schedule. If you often find yourself wishing there were more hours in the day, this guide will offer time management tips for students so you can accomplish what you need to get done, have fun with your friends, and gain back some valuable time for yourself. 

1. Create a Calendar

Don’t be caught by surprise by an important paper due two days from now or a dinner with your family the same night you planned for a group study session. Create a calendar for yourself with all your upcoming deadlines, exams, social events, and other time commitments well in advance so you can see what’s coming up. 

Keep your calendar in a place where you can see it every day, such as in your planner or on your wall above your desk. If you prefer a digital calendar, check it first thing every day to keep those important events fresh and top-of-mind. For greater efficiency, make sure you can integrate it with your other tools, such as your email.

Digital calendar options include: 

  • Google Calendar 
  • Outlook Calendar
  • Fantastical

2. Set Reminders

After you’ve created your calendar, give yourself periodic reminders to stay on track such as to complete a study guide in advance or schedule a meeting for a group project. Knowing deadlines is important; however, staying on top of the micro tasks involved in meeting those deadlines is just as important. You can set an alarm on your phone, write it down in a physical planner, or add an alert to your digital calendar. The reminders will help to prevent things from slipping through the cracks during particularly hectic days.

Make sure you’ve allotted enough time to study for that big test or write that final paper. Time management is all about setting yourself up for success in advance and giving yourself the tools to accomplish tasks with confidence. 

Read our blogs, Your Guide to Conquering College Coursework and Top 10 Study Tips to Study Like a Harvard Student , for more suggestions.

3. Build a Personalized Schedule

Each person’s day-to-day is different and unique to them, so make sure your schedule works for you. Once you’ve accounted for consistent commitments such as classes or your shifts at work, add in study sessions, extracurriculars, chores and errands, and social engagements.

Consider your personal rhythm. If you typically start your day energized, plan to study or accomplish chores then. If you fall into an afternoon slump, give yourself that time to take a guilt-free TV break or see friends.

Having a schedule that works for you will help maximize your time. Plus, knowing exactly when your laundry day is or when your intramural volleyball practice is every week will help you avoid trying to cram everything in one day (or running out of clean socks!)

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4. Use Tools That Work For You

Just like your calendar and schedule, the tools you use to keep you organized should be the right fit for you. Some students prefer physical planners and paper, while some prefer going totally digital. Your calendar can help you with long-term planning, but most of these tools are best for prioritizing from day to day.

Explore what best suits your needs with some of the following suggestions:

Planners can help you keep track of long-term deadlines, such as important essay deadlines, upcoming exams, and appointments and meetings. They often provide a monthly overview each month, as well as day-to-day planning sections, so you can stay ahead. 

  • Papier – Offers a 20% student discount 

If your schedule is jam-packed and you have trouble figuring out what to do and when, scheduling day by day—and sometimes even hour by hour—can help you slot in everything you need to do with less stress.

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Note Taking

From class to study sessions to errands, keeping track of everything can feel overwhelming. Keeping everything in one place, whether on the go or at your desk, can help keep you organized.

  • Bullet journals

5. Prioritize

Sometimes there really is too much to do with too little time. In these instances, take just a few minutes to evaluate your priorities. Consider which deadlines are most urgent, as well as how much energy you have. 

If you are able to complete simple tasks first, try getting them out of the way before moving on to tasks that require a lot of focus. This can help to alleviate some of the pressure by checking a couple things off your to-do list without getting bogged down too early.

If you are struggling to fit everything in your schedule, consider what you can postpone or what you can simply say no to. Your friends will likely understand if you have to meet them for coffee another time in order to get in a final library session before a challenging exam. 

6. Make Time to Have Fun — And For Yourself

Time management isn’t just about getting work done. It’s also about ensuring that you can put yourself and your mental wellbeing first. Consistently including time for yourself in your schedule helps to keep your mental health and your life in balance. It can also be helpful to have things to look forward to when going through stressful periods.  

Whether it’s going for a bike ride along the river, spending time with your friends and family, or simply sleeping in on a Sunday, knowing you have space to relax and do things you enjoy can provide better peace of mind. 

7. Find Support 

Preparation and organization can sometimes only get you so far. Luckily, you have plenty of people rooting for your success. Keep yourself and your classmates on task by finding an accountability partner or study buddies. Remind your roommates when you need extra space to work on a paper. 

Your school’s academic resource center is also there to support you and point you in the right direction if you need additional help. Getting—and staying—organized is a collaborative effort and no one can do it on their own. 

8. Be Realistic and Flexible 

Sometimes unforeseen circumstances will come up or you simply may not be able to get to everything you set out to do in a given day. Be patient with yourself when things don’t go exactly to plan. When building your calendar, schedule, and priorities list, be realistic about what you can accomplish and include buffer time if you’re unsure. This can help to reduce obstacles and potential friction.

Time management isn’t just about sticking to a rigid schedule—it’s also about giving yourself space for change.

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About the Author

Lian Parsons is a Boston-based writer and journalist. She is currently a digital content producer at Harvard’s Division of Continuing Education. Her bylines can be found at the Harvard Gazette, Boston Art Review, Radcliffe Magazine, Experience Magazine, and iPondr.

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Our reasons may vary, but everyone experiences stress. Here are some of the common reasons high school students feel stressed, and what they can do about it.

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What Can Business Schools and Industry Do Together?

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  • Under pressure to adapt to emerging tech and adopt sustainable practices, businesses struggle to find resilient workers who can lead teams effectively.
  • Business schools can provide greater value to companies by designing experiential opportunities for students to hone soft skills, cultivate professionalism, develop ethical foundations, and discover their sense of purpose.
  • Schools also can collaborate with practitioners more frequently to co-create curricula, producing more graduates with the skills that industry needs most.

How can the leaders of business schools and industry organizations come together more often to align curricula with the realities of today’s business environment? That question framed a recent roundtable discussion held in February at the AACSB Deans Conference in Barcelona. Or, as one participant put it, how can educators and practitioners join forces to ensure that there is “more classrooms in the firms and more business in the classroom”?

Among the roundtable participants were six business leaders representing companies in the technology, accounting, and media sectors; four business school deans; and five AACSB representatives. AACSB arranged the discussion to help close the gap between business education and industry.

With that in mind, the group engaged in a conversation about the challenges today’s organizations face in attracting, hiring, and retaining quality talent, before brainstorming ways that business schools and businesses can create a more robust and market-ready workforce. Here are the top takeaways from the discussion, which encompass seven challenges affecting the labor pipeline and eight ways business schools can help firms address them.

1. Changing Worker Demographics

Global demographics are swiftly changing, making it more difficult for companies to find, hire, and train employees, said Ron Tuninga, session moderator and vice president and managing director of AACSB’s Europe, Middle East, and Africa office. For example, populations in the European Union are aging; as a result, EU companies face a future when there won’t be enough younger workers to replace those entering retirement.

At the same time, African countries have comparatively young populations and will require better and more accessible training to support growth and prosperity across the continent.

2. Changing Worker Expectations

According to several participants, young people today expect greater flexibility and mobility in their educational and career trajectories. More are seeking self-paced and short-term learning experiences, as well as options for remote or part-time work. They want to work for companies with policies that are friendly to families and support worker well-being, and they’re seeking greater social connection and a sense of purpose.

One dean wondered whether it was even possible for business schools to give students a sense of purpose. Even so, she added that business schools could offer students ample opportunities to find their purpose through activities that compel them to explore their passions and see how they deal with problems. Business schools could design curricula that help students “develop different types of curiosity” and view their work as a way to give back and “produce something good for society.”

3. A Shrinking Talent Pipeline

The group agreed that many companies are struggling to find workers with the skills they need—especially in fields such as auditing and accounting, which students often perceive as boring or lacking diversity. The two roundtable participants from accounting firms noted that many students are not aware of the positive societal impact that these fields have.

That’s why it’s important for universities and businesses to “communicate a passion” for the work, a participant said. Students need to know that accountants and auditors don’t just crunch numbers—they analyze data, define strategy, ensure transparency, and work on approaches to help mediate climate change. “How can we make accounting sexy? How can we make it more interesting? It is such an incredible career,” said another. “There are so many opportunities.”

4. More Options for Training

While companies are looking for candidates with the skills to be programmers, analysts, and engineers, young people do not necessarily need formal college degrees to attain these skills. In fact, as one person pointed out, companies in some countries are hiring apprentices straight out of high school and providing them with on-the-job training for technology-driven careers.

Prospective students have so many educational resources available to them—ranging from free instructional videos on YouTube to corporate universities—that business schools need to focus on providing experiences that students cannot find elsewhere. “We don’t have the monopoly on education anymore,” said one panelist.

5. Greater Multidisciplinary Challenges

The world increasingly needs multifaceted solutions to complex problems in areas ranging from healthcare and energy to sustainable supply chains and digital technologies. If organizations are to tackle these issues effectively, Tuninga noted, they will “need people who understand different disciplines.”

6. A Need for Diversity

The last five years have seen both a call for greater diversity and a backlash against diversity initiatives—especially in the United States. At the same time, recruiters are being asked to “do more with less,” said one practitioner. For that reason, business schools can help organizations more effectively pinpoint and attract diverse talent.

Several participants said that their companies would especially like to see more women pursue careers in accounting and STEM fields. “In many programs,” said one dean, “we have a lot of female students, but in economics and finance programs, which are quite large, we graduate hardly any women.” Although her business school offers discipline-based scholarships to women, young women often have “already made their decisions when they were in high school.” By the time they come to college, it might be too late to influence their career choices.

A practitioner shared that, each year, her technology company conducts workshops for girls 16 years old and younger to introduce them to STEM fields early in their decision-making processes. The consensus was that business schools could attract more women to certain fields by starting their own recruiting efforts earlier as well.

7. A Need for Ethics

Although it has been more than two decades since the corporate scandals at Enron and Arthur Andersen, the need to teach ethics has never been greater, said another dean present. He pointed to South Africa and its need to address intractable issues such as poverty, unemployment, and inequality, as well as to fix a struggling healthcare system and an unreliable energy grid. However, these problems all are exacerbated by a lack of ethical leadership.

He paraphrased the words of Africa’s first female head of state,  Ellen Johnson Sirleaf , saying that   “Africa is not poor, but it is poorly led.” He cited the example of the Gupta brothers , who through unethical business dealings essentially “captured” major industries in South Africa and gained influence over its government .

Their corruption has soured many young people on careers in business, he said, especially in accounting. But business schools can help “destigmatize the profession” and restore trust in accounting and auditing by teaching ethics, sustainability, and environmental, social, and government issues. In this way, schools can “empower leaders that are going to be forces for change.”

Minding the Skills Gap

To address the issues above, organizations need to hire talent with a range of skill sets. Unfortunately, said several panelists, many job seekers seem ill-prepared, and recruiters at their companies are reporting a “lower quality” and a “slight decline in professionalism” among recent graduates.

Candidates most often fall short on important soft skills such as communication, creativity, innovation, negotiation, and team building. Additionally, one panelist said that job applicants often lack the ability to tell their own stories well enough to highlight what they can bring to an organization. And once employed, they can struggle with the behaviors expected of them in professional roles.

Some corporations take that training upon themselves. A panelist pointed to her organization’s corporate university, which focuses on “upskilling, reskilling, and making sure that people who join our organization have the right cultural fit.”

Another emphasized that too many young workers lack interpersonal or human-centric skills such as empathy and compassion. “Leaders have to take care of their teams. Relations between humans are very complex, and leaders must manage this complexity,” he said. “We have to train our people to manage people—in a world of machines, humanity is more important than ever.”

What Can Business Schools Do?

Lily Bi, CEO of AACSB, suggested that the discussion highlighted four building blocks of skills that students need to develop: foundational knowledge, technical skills, soft skills, and contextual knowledge . She pointed out that students might be able to develop technical skills via self-paced learning options (such as free online courses and YouTube videos). They can gain exposure to organizational contexts only by working in real-world business environments.

The value proposition for universities and business schools, then, lies in developing foundational and soft skills—especially the latter, where business schools can add tremendous value.

The group then brainstormed ways that business schools could best prepare more well-rounded talent and presented the following ideas:

Teach personal presentation skills. Show students how to present themselves professionally and tell their own stories clearly—to articulate their skills and the ways they can contribute to organizations.

Hone interpersonal skills. Provide students with opportunities to collaborate with people who are different from them. As one panelist put it, “You need to know how to talk to people, you have to persuade them, you have to take care of them, you have to be charismatic, and you have to be passionate.”

Build resilience. Teach students how to handle challenges and bounce back from failures. One practitioner shared that employee turnover rates at his company have become unusually high, often because young workers quit at the first sign of difficulty—or after receiving one negative comment in an otherwise positive evaluation. Business schools can help students grow accustomed to accepting constructive criticism and using that feedback to support their personal and professional growth.

Teach how to frame problems. Require students to “frame their own problems, rather than just presenting them with problems, which we tend to do a lot in academia,” said Geoff Perry, AACSB’s executive vice president, global chief membership officer, and managing director, Asia Pacific. When students learn to identify both the real and potential complications in the situations they face, they “develop curiosity and critical thinking” and learn to work with others to find solutions when they hit problems,” he said. “That’s the sweet spot that we’re looking for.”

Develop maturity through experiential learning. Require students to work on hands-on projects to help them grow more sophisticated in their use of technology and more knowledgeable about sustainable practices. Ensure that they often work directly with companies, so that they can develop the maturity they’ll need to become effective leaders and become more fluent in the language and behaviors of business.

Use popular technologies. Don’t forbid students from using new technology, such as artificial intelligence, in the classroom. Instead, encourage students to use the same platforms and devices that organizations are deploying today. Turn to corporate partners to supply the latest technology and provide projects that support its application.

Provide mentorship. Help students sort through the myriad options open to them as they try to choose their future careers. Industry mentors can help students “understand what the market needs, and which direction would be the best based on their capabilities.”

Teach and model values, not just skills. Communicate the values you want the next generation to take forward. Also, encourage faculty and administrators to model skills such as collegiality and collaboration in their own research, teaching, and workplace behaviors. “Kids are great imitators,” as one panelist put it. “If you’re a student, your professor is one of the most important people to shape your thinking. So, we need to think about how we handle and behave ourselves.”

In the end, it will be important for business schools to assume much of the burden for training and reskilling, so that companies can focus more on advancing their missions and refining their business models. “What is it that we can do together, business schools and businesses,” one dean asked, “to create the people that you need in the future?”

What Comes Next?

The group agreed that to supply the talent industry needs, schools must have ample input from business. Schools could best incorporate business perspectives by inviting business leaders to participate in classrooms, on advisory boards, and in collaborative projects.

In addition, a panelist suggested that, instead of simply surveying corporate partners about their needs, schools should create opportunities for multilateral conversations. During these discussions, academics, business leaders, and students could exchange ideas, learn from one another, and co-create curricula that more directly reflect immediate market needs.

The roundtable concluded on the idea that AACSB could act as a catalyst that connected its member schools with businesses via future discussions or an online forum. One person suggested that the association might bring educators, practitioners, and students together for specific immersive projects.

“For universities, this is a tremendous time” to help companies find, retain, and reskill workers via training that no other providers can offer, said one dean. “We have the legitimacy, we have the expertise in education,” he added. The faster business schools can connect to organizations as each reskilling need arises, the better they can help companies bridge their training gaps.

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  • Crafting Effective IEP Goals for Student Success

Understanding the Importance of IEP goals

IEP stands for Individualized Education Program, which is a personalized plan developed for students with disabilities. IEP goals are specific targets designed to address the unique educational needs of each student. These goals help measure the students’ achievements and guide the delivery of specialized instruction and support services.  By having clear and measurable goals, the IEP will help to ensure that the student is making meaningful strides toward their educational and developmental objectives.

What Are Effective IEP Goals?

Effective IEP goals are specific, measurable, achievable, relevant, and time-bound ( SMART ). These goals should be tailored to the individual’s needs, abilities, and circumstances.  Effective IEP goals address the area of concern identified in the student’s evaluations and assessments, whether they are academic, social, behavioral, or functional.  These goals should be clear and understandable to all members of the team.

Progress Monitoring Tools and Professional Guidance

Progress monitoring tools for IEP goals can vary depending on the specific needs of the student.  Some common tools that are used include: Data collection sheets, checklists, rubrics, curriculum-based assessments, and observation notes.  Professional guidance for developing and monitoring goals can be obtained through different sources, including Special Education Teacher, School Psychologists, Speech Therapist, and Special Education Coordinators or Administrators.

Identifying Common Pitfalls

Setting goals that are too broad of vague can make it difficult to measure progress accurately.  Goals should be specific and targeted to meet the individuals needs and areas of concern.  Goals should align with the student’s current level of functioning, as well as with the curriculum and educational standards.  It is also important to recognize the students’ strengths to support their overall success.  Collaboration with parents and students is crucial in developing meaningful IEP goals that address the students needs and priorities.  Effective progress monitoring is important to track the student’s progress toward their goals and determine whether the interventions are working.

Demonstrating successful goal implementation:  To ensure successful implementation, goals should be clearly defined, measurable, and tailored to the individual students needs and abilities.  The implementation of interventions and strategies should be directly linked to the goals outlined in the IEP.

Advocacy Strategies

Empowering parents and caregiver to advocate for tailored IEP goals is crucial for ensuring the success of students with special needs.  Some ways to support them would be:

  • Providing parents and caregivers with comprehensive information about the IEP progress.
  • Encouraging parents and caregivers to actively participate in the development of their child’s IEP goals.
  • Maintain open communication with parents and caregivers throughout the IEP process.
  • Connect parents and caregivers with relevant resources and support networks.

Ongoing collaboration is crucial for creating a supportive and cohesive environment where students with special needs can thrive academically, socially, and emotionally.  By working together towards common goals, the IEP team can ensure that each student receives the individualized support and opportunities to reach their full potential.

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How an Indianapolis teacher is using the solar eclipse to inspire her students

Lee V. Gaines

what is the importance of a business plan to students

Second graders Hanah Sung, Izaac Stuck and Amaurie Robinson simulate an eclipse by casting a shadow with a play dough moon on an inflatable globe. Their teacher, Natasha Cummings, directs them to aim the shadow over the spot on the globe where Indianapolis would be. Kaiti Sullivan for NPR hide caption

Second graders Hanah Sung, Izaac Stuck and Amaurie Robinson simulate an eclipse by casting a shadow with a play dough moon on an inflatable globe. Their teacher, Natasha Cummings, directs them to aim the shadow over the spot on the globe where Indianapolis would be.

It's a sunny March afternoon at Winchester Village Elementary School in Indianapolis, and teacher Natasha Cummings is leading her class in a brand new lesson. It's the first time she's teaching it – and also likely the last.

The second graders audibly gasp when Cummings explains the day's activity: They'll be simulating a total solar eclipse using the real sun, an inflatable globe and a moon made out of a play dough ball mounted on a stick.

The eclipse gives astronomy clubs an opportunity to shine

The eclipse gives astronomy clubs an opportunity to shine

On April 8, a narrow strip of North America will experience a total solar eclipse, in which the moon entirely covers the sun, darkening the sky so that only the sun's corona, a ghostly white ring, will be visible.

Indianapolis is one of several cities in the path of totality. The last time that happened was over 800 years ago, and it won't happen again until 2153.

For many of Cummings' students, this event is a once-in-a-lifetime opportunity. Cummings hopes learning about and witnessing the eclipse will inspire her students, and get them excited about science.

It's an experience she expects them to remember for the rest of their lives.

"This is a story you're gonna be able to tell," she reflects before class.

"You, as a second grader, you experienced this totality."

Plan to watch the eclipse from a wild mountain summit? Be ready for harsh conditions

Plan to watch the eclipse from a wild mountain summit? Be ready for harsh conditions

In a grassy area outside the school, Cummings' eclipse simulation begins: Students take turns holding the inflatable globes, and casting a shadow with their play dough moons. Cummings directs them to aim the shadow over the spot on the globe where Indianapolis would be. It's a little chaotic, but the students quickly figure out how to properly position the moon's shadow over their hometown.

"Good job guys, you're really smart," a student says to his friends.

How an eclipse can inspire a career in the sciences

Thomas Hockey, a professor of astronomy at the University of Northern Iowa, remembers his first eclipse experience fondly. On March 7, 1970, when Hockey was 10 years old, he witnessed a partial solar eclipse outside his home in Angola, Ind. — a two-and-a-half hour drive north of Indianapolis.

what is the importance of a business plan to students

Natasha Cummings also led her fifth graders through a solar eclipse lesson. The older kids' eclipse simulation incorporated measurements. Kaiti Sullivan for NPR hide caption

Natasha Cummings also led her fifth graders through a solar eclipse lesson. The older kids' eclipse simulation incorporated measurements.

It was nearly a year after the Apollo program had put the first person on the moon, and Hockey's interest in space was already developing. But he credits this partial eclipse as one of the reasons he chose to study astronomy.

"It was mesmerizing, as more and more of the sun disappeared, producing an odd shape," Hockey recalls.

It also sparked a fascination with eclipses. Hockey would go on to become what's called an umbraphile — someone who chases eclipses all over the world — and he recently published a book about the history of eclipse chasers.

Hockey says he didn't learn about solar eclipses when he was in grade school. He thinks the fact that elementary school teachers like Cummings are now teaching about them is an indication that science education has improved since he was a child.

what is the importance of a business plan to students

Cummings (left) walks fifth graders Donavan Clarke (center) and Kevin Trinidad Cuautle through a solar eclipse simulation using a ping pong ball to represent the moon, and a bright spotlight for the sun. Kaiti Sullivan for NPR hide caption

Cummings (left) walks fifth graders Donavan Clarke (center) and Kevin Trinidad Cuautle through a solar eclipse simulation using a ping pong ball to represent the moon, and a bright spotlight for the sun.

It's also an opportunity to show kids that science doesn't just happen behind closed doors.

"Science is not done by old, gray-haired people in lab coats, necessarily. Citizens can participate in it. It's not a magic black box, it's all around us," Hockey says.

The April 8 total solar eclipse will be Hockey's ninth. He plans to bring a group of undergraduate students with him to experience totality in his home state of Indiana. He says some of them plan to become science teachers.

"And so they will talk about eclipses to their students, and perhaps we will have a new generation of astronomers inspired by eclipses," Hockey says.

Another important lesson: eclipse safety

For Cummings, teaching her students how to view the eclipse safely is a top priority.

what is the importance of a business plan to students

Second graders practice using solar eclipse glasses outside Winchester Village Elementary School in Indianapolis. Kaiti Sullivan for NPR hide caption

"The only glasses that you should use are the solar eclipse glasses to look at the sun safely," she tells her class.

Exposure to the sun without proper protection can permanently damage the eye's retina. But during totality, which lasts only a few minutes, you won't see the sun's corona with those eclipse glasses on. Totality is the only part of the eclipse that's safe to look at without them.

Watching a solar eclipse without the right filters can cause eye damage. Here's why

Shots - Health News

Watching a solar eclipse without the right filters can cause eye damage. here's why.

Outside, her students take turns trying the glasses on and looking up at the sun. They shriek with excitement as they gaze at the unfamiliar orb.

"If you look up and see that orange thing that's right there — it looks like a street light," says second grader Ja'Aire Tate.

Cummings' district, Perry Township Schools, is one of several Indianapolis school systems that chose to make April 8 a remote learning day.

what is the importance of a business plan to students

The only way to safely look directly at a total solar eclipse is by looking through special glasses like these, or by creating a pinhole viewer. But be sure to take the glasses off during the few minutes when totality happens, so you don't miss the sun's dim corona. Kaiti Sullivan for NPR hide caption

The only way to safely look directly at a total solar eclipse is by looking through special glasses like these, or by creating a pinhole viewer. But be sure to take the glasses off during the few minutes when totality happens, so you don't miss the sun's dim corona.

The district says the decision is an effort to keep kids safe: In Indianapolis, the eclipse will become visible around 1:50 p.m., and totality will begin at about 3:06 p.m. — right around the time of school dismissal.

"Traffic will be pretty backed up... we don't want to have buses and cars stuck on the road," says Elizabeth Choi, director of communications for Perry Township Schools.

Cummings tells her students they can ask their parents to purchase eclipse glasses online or at local stores, like Kroger. Or, she says, they can watch a live-stream of the eclipse on YouTube.

But Hockey hopes these kids do get a chance to go outside during the eclipse. Even without eclipse glasses, he says they can make a pinhole viewer with a few common household supplies that will allow them to view the event safely.

He says, "I pretty much guarantee that those children in the path of totality, who have been guided by their teachers or parents to observe the eclipse and do so safely, will remember it the rest of their lives."

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UNI students make a difference, one tax return at a time

Annie Feldman prepares tax returns as part of VITA

There isn’t much more fulfilling for Jeff Theisen (‘23) than helping people, seeing them smile and accepting a firm handshake. And that’s exactly the experience he gets working weekly with the University of Northern Iowa’s  Volunteer Income Tax Assistance (VITA) program, run through the Wilson College of Business.

The program helps those who make $64,000 or less in yearly income, senior citizens, persons with disabilities and limited English-speaking taxpayers file tax returns. Hosted once a week on Wednesdays during tax season, VITA has been around for half a century. Accounting students within the Wilson College of Business – students like Theisen – become certified and partner with community members to file taxes, all with the help of faculty advisers.

“You see the smile on their face and the gratitude they have, and you know you made a difference,” said Theisen, a post-graduate student in the  accounting program who is set to complete his CPA certification this semester. He earned his undergraduate degree in accounting and finance this past December. “That’s probably what makes me feel the best.”

what is the importance of a business plan to students

Annie Feldman (‘24), another student volunteer, agrees that helping and interacting with clients is one of her favorite parts of the program. But another very important aspect is the real-world experience she and other students receive, both in client conversation and tax preparation.

A typical session takes about an hour. Clients arrive, make sure they have the necessary tax documents and then sit down with a preparer. Students walk through the process with the client, and when the return is finished, a faculty adviser reviews the tax return before it is e-filed.

“It’s such a good experience being a preparer because I get to use tax software and prepare real returns,” said Feldman, who is also working on completing her CPA certification. “Additionally, it's been cool to meet people in the community I usually wouldn't interact with. You really get a sense that you're helping them because taxes can be confusing, and doing that by yourself can be overwhelming."

what is the importance of a business plan to students

One of Theisen's most memorable clients was an international student. Although they are subject to similar tax rules as citizens, there are minor differences due to their visa status and whether they earned income in the United States.

“That was a challenge for me because I had never seen anything like that,” Theisen said. So, I was able to draw from some background knowledge I had from classes and training and also learned through it.”

For students considering the  VITA program , Feldman and Theisen offer their endorsement. They highlight the program's ability to illuminate one's accounting career path, enhance one's resume and contribute to the Cedar Valley community. The program's benefits extend far beyond the classroom, providing students with a unique opportunity to make a difference while honing their professional skills.

“If you’re unsure about what you want to do in accounting, whether you want to go the tax route, definitely do the VITA program,” Theisen said. “You’ll get to experience the real work of preparing tax returns, and you’ll see firsthand if that’s what you want to do when you leave UNI.”

UNI’s Rialto Dining Center hosts annual takeover with local food entrepreneurs

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UNI to host inaugural Des Moines Real Estate Alumni Reception and Award Presentation

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UNI business grad leads Iowa’s newest pro hockey team

what is the importance of a business plan to students

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Refunds for Benefytt customers who paid for health plans and products

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Did you pay  Benefytt , which also did business as “MyBenefitsKeeper,” for a health plan or product that didn’t deliver the comprehensive insurance coverage the company promised? You might be getting some of your money back.

The FTC will return nearly $100 million dollars to Benefytt customers who paid for health plans the FTC says were falsely marketed as comprehensive health insurance or an “Obamacare” plan under the Affordable Care Act (ACA).

Here’s what to know about refunds:

  • Customers who paid Benefytt $1,000 or more between 2017 and 2022 will get some money back. Checks will be mailed automatically and should arrive within the next two weeks.
  • Cash or deposit the check as soon as possible. Refund checks expire after 90 days. 
  • For more information or questions, call the refund administrator, Epiq Systems, at 888-574-3126.
  • The FTC never requires you to pay money or give account information to cash a refund check. Anyone who contacts you and says they’ll help you file for a refund or get your money back — if you pay them first — is a scammer.

Before you sign up for health coverage or products:

  • Compare plans, coverage, and prices at a trusted source .  HealthCare.gov and state marketplaces are the first stop for information about comprehensive, ACA-compliant health insurance coverage.
  • Find out more about the seller.  Ask for the name of the agent and the agency that's offering you a plan. Search online for the names plus “complaint,” “scam,” or “fraud.” Read what others are saying.
  • Check with your  state insurance commissioner’s office  to see if they have a license and find out if there are complaints. If they don’t have a license, what they’re selling is not insurance.

Resist pressure to make a decision on the spot. Legitimate health plans won’t pressure you to make a decision on the spot, and they’ll always give you a chance to compare their plan with other options.

Did you pay Benefytt for a health plan or product?  You might be getting a refund.  Learn more: ftc.gov/refunds

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How about my bill that went into collections for 2700$? They said they would pay for colonoscopy. I really took it up the ass for mybenefitskeeper. The refund is a far cry from what I feel I deserve! Thanks alot

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Biden 'cancels' nearly $6B in student loans for public sector workers

The student loans will be forgiven for 78,000 borrowers working in the public sector, bringing biden's total student debt write-offs to $143.6b.

FOX Business Madison Alworth reports from New Hampshire where college and trade schools students are reacting to more loan forgiveness.

Biden admin cancels $5 billion in student loan debt

FOX Business Madison Alworth reports from New Hampshire where college and trade schools students are reacting to more loan forgiveness.

President Biden announced Thursday that $5.8 billion in student loans would be "canceled" for 78,000 borrowers working in the public sector, bringing his administration's total student debt write-offs to $143.6 billion.

Biden pledged to find other avenues for tackling debt relief last year after the Supreme Court in June blocked his broader plan to cancel $430 billion in student loan debt, deeming it unconstitutional .

Republicans have often criticized student debt cancellation plans, noting that the loans will be transferred to taxpayers who will ultimately end up footing the bill.

President Joe Biden State of the Union

President Biden speaks during the State of the Union address. (Nathan Howard/Bloomberg via / Getty Images)

BIDEN ANNOUNCES PLAN TO BAIL OUT STUDENTS FOR LOAN DEBTS UNDER $12K

The latest plan comes as Biden seeks re-election in November and as the national debt has already shot past $34.5 trillion . By comparison, just four decades ago, the national debt hovered around $907 billion.

Thursday's announcement will see public service employees such as teachers, nurses and firefighters have their debt written off under the Public Service Loan Forgiveness Program (PSLF), an initiative created in 2007 and signed into law by President George W. Bush to forgive student debt for Americans who go into public service. It also applies to nonprofit employees.

Biden says the plans bring much-needed relief to borrowers with their debt becoming "a barrier to opportunity."

student loan forgiveness rally

Demonstrators rally outside the Supreme Court after it struck down President Biden's student debt relief program in June. (Kent Nishimura/Los Angeles Times via / Getty Images)

THE LAWLESSNESS OF BIDEN'S STUDENT LOAN BAILOUT WORKAROUNDS

"These public service workers have dedicated their careers to serving their communities, but because of past administrative failures, never got the relief they were entitled to under the law. Because of the fixes my administration has made, we have now canceled student debt for over 870,000 public service workers – compared to only about 7,000 public service borrowers ever receiving forgiveness prior to my administration. 

"And through all of our various student debt relief actions, nearly four million Americans have had their student debt canceled under my administration."

Student loan forgiveness

Activists attend a student loan forgiveness rally near the White House on April 27, 2022. (Anna Moneymaker / Getty Images)

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As of June 2023, about 43.4 million U.S. student loan recipients had $1.63 trillion in outstanding loans, according to the Federal Student Aid website. Higher education debt has tripled since the 2008 financial crisis.

Starting next week, borrowers who receive this forgiveness will get an email from Biden congratulating them on their relief. 

In addition, Biden will also send emails directly to nearly 380,000 additional public service workers who are within two years of debt forgiveness through PSLF. The president’s email to these borrowers will thank them for serving their community and will notify them that if they continue their work in public service, they are on track to have their debt canceled within one or two years.

Reuters contributed to this report.

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